Everyday Law 



BACON 








Class / 

Book 



Copyright}! . 



COPYRIGHT DEPOSIT 



EVERYDAY 

L AW 



■ or- 



A Plain Statement of the 
Elemental Principles qf Law 
Governing Ordinary Business 
: : : : Transactions : : : : 



Prepared for Popular Use by 

Frederick H. Bacon, A. B. 




THE EFFICIENCY BOOK CO. 
DETROIT AND ST. LOUIS 

1 1913 

l7:;,: ! ■, . ... ;. :, ; l; ,.:; : , :. .. . :: ..,, .: : . ::.:: : 






Copyright 1913 
by Frederick H. Bacon 



©CI.A35 766 6 
A*/ 



PREFACE. 



The author of this book has briefly, but accurately, stated the 
elemental principles of the law governing the usual and everyday 
business transactions in a way that any man or woman of ordinary 
intelligence can understand. 

In view of the fact that the greatest and most comprehensive, 
yet condensed, summary of law ever published, "The Encyclo- 
pedia of Law and Procedure," is in forty large volumes and the 
fruit of the labors for many years of more than one hundred 
learned jurists, it cannot be expected that one small volume can 
answer all the questions that may arise, still it will be found 
indispensable to every man and woman and give them practical 
information of incalculable value. It does not attempt to state 
all the law, but tells enough to answer all ordinary purposes so 
far as every day people are concerned. It will tell them when a 
lawyer's advice is required and also how to act with independent 
judgment if necessary. 

The subjects are treated in alphabetical order but a complete 
index is also added. 



iv CONTENTS 






Chapter I. Page. 
What "Law" is 1 

Chapter II. 
Administration , 3 

Chapter III. 
Agency 9 

Chapter IV. 
Arbitration 15 

Chapter V. 
Associations 16 

Chapter VI. 
Bailment 18 

Chapter VII. 
Bankruptcy 21 

Chapter VIII. 
Banks and Banking 21 

Chapter IX. 
Bonds 32 

Chapter X. 
Common Carriers 35 

Chapter XI. 
Contracts 42 

Chapter XII. 
Corporations 53 



CONTENTS v 



Chapter XIII. Page. 
Courts 66 

Chapter XIV. 
Damages 68 

Chapter XV. 
Descents and Distribution 72 

Chapter XVI. 
Dower 76 

Chapter XVII. 
Exemptions 80 

Chapter XVIII. 
Garnishment and Execution 83 

Chapter XIX. 
Homestead ' 85 

Chapter XX. 
Husband and Wife. Marriage and Divorce 89 

Chapter XXI. 
Infants, Guardian, etc. 97 

Chapter XXII. 
Innkeepers 101 



Chapter XXIII. 
Insane Persons 104 



vi CONTENTS 



Chapter XXIV. Page. 
Insurance 10G 

Chapter XXV. 
Interest, Usury 118 

Chapter XXVI. 
Landlord and Tenant 120 

Chapter XXVII. 
Liens 126 

Chapter XXVIII. 
Mortgages 129 

Chapter XXIX. 
Negotiable Instruments — Commercial Paper, Notes, Drafts 
and Checks 134 

Chapter XXX. 
Nuisance 145 



Chapter XXXI. 
Partnership 148 

Chapter XXXII. 
Patents, Trademarks and Copyright 153 

Chapter XXXIII. 
Real Estate 159 

Chapter XXXIV. 
Sales 163 



CONTENTS vii 



Chapter XXXV. Page. 
Sureties 168 

Chapter XXXVI. 
Trusts 171 

Chapter XXXVII. 
Wills 176 



EVERYDAY LAW 



CHAPTER I. 



WHAT LAW IS. 

LAW may be said to be a code of rules for the regulation 
of municipal and individual affairs. As commonly used 
*/ the word means "jurisprudence," or the science of the 
laws prescribed by the state for the conduct of its 
citizens. In other words, briefly stated, it is a general rule 
of external human action enforced by a sovereign political authority. 
This authority may be exercised either by acts of legislatures 
or Congress, or municipal assemblies, or the decisions of the 
courts, all done under the powers conferred by a fundamental 
agreement called "Constitution". The legislature, or Congress, 
or municipal assembly, makes express and positive enactments 
commanding, or forbidding, certain acts, while the courts con- 
strue and apply these legislative acts, and in so doing, in their 
opinions in cases brought before them, also lay down rules which 
have the force of precedents and are followed and observed 
with almost equal fidelity. 

Law is divided into "public" and "private". All rules which 
define and control the government of a country and the rela- 
tions between it and its citizens come under the head of public 
law, while private law defines and controls the relations of one 
citizen with another. 

The Constitution of the United States is the foundation of the 
laws of the nation and all state constitutions and acts of Con- 
gress and legislatures, and city or municipal assemblies, must 
not be in conflict with any of its provisions. So a state con- 



EVERYDAY LAW 

stitution is the fundamental compact between its citizens and 

defines and controls all administration of justice and enact- 
ments of the legislature in such state. 

There are two great systems of law, termed "common law" 
and "civil law". The latter is in force in Louisiana, and to 
some extent in other states, and is the old Roman law as modi- 
fied by the code prepared under the direction of the great 
Napoleon and by legislative enactments. The common law may 
be said to be the customs and laws of England and acts of 
Parliament prior to about A. D. 1700 as construed by the 
English courts in their reported opinions. It is in force in most 
of the states and governs when not in conflict with the Consti- 
tution of the United States, the express enactments of Con- 
gress, or state legislatures, or state constitutional provisions. 
In a popular sense common law consists of the reported de- 
cisions of the courts of the land. 

It will be seen, therefore, that law consists of express enact- 
ments, or statutes, of the legislatures, or Congress, the ordinances 
of municipalities, the constitutions of the United States and the 
several states and the voluminous reported opinions of the courts, 
all contained in thousands of huge volumes. 

It is manifestly impossible for even lawyers to master this 
enormous mass of often conflicting and abstruse rules and prece- 
dents, much less the everyday business men and women, yet 
every person should have some knowledge of the law so that 
he may act with a fair degree of intelligence in the ordinary 
affairs of life. While he may not understand the meaning of 
the contents of the many law books which fill the shelves of 
successful lawyers, he should know what is meant by the usual 
agreements between business men, and the nature of associa- 
tions, corporations and partnerships, he should know something 
about wills, administration . and contracts. It is possible to 
acquire this knowledge in a general way, although experts must 
be consulted should the need for their assistance arise. 

(See also the subject of Courts.) 



CHAPTER II. 



ADMINISTRATION. 

THIS is a term applied to the management of the estate 
of a deceased person, by one appointed for that pur- 
pose by the proper court. When one dies leaving 
property, in order that such property may be col- 
lected, preserved and duly accounted for; that all just debts 
and the charges and expenses of burial and of the settlement 
of his estate, be paid and the remainder, if anything, be dis- 
tributed to the parties entitled therto, it is usual for a special 
tribunal, variously styled in the different states probate, surro- 
gate's, or orphans' court, to appoint an administrator, or, if 
there be a will, an executor, to administer and settle the 
estate and make proper distribution among those entitled 
thereto. The duty of administering the estate under the 
supervision of the court is conferred upon persons called the 
"personal representatives' ' of the deceased, who may be either 
executors or administrators. A man making a will is called 
the "testator", a woman, "testatrix", and if a person dies 
leaving no will he is said to die "intestate". An "executor", 
or if a woman "executrix", is a person appointed by a testator 
to carry out the directions contained in his will and dispose 
of his property after his death in accordance with his wishes 
therein contained. An "administrator", or if a woman "admin- 
istratrix", is a person appointed by the court to settle the 
estate of one who dies intestate. 

Formerly an executor or administrator, had only to do 
with the personal property of the deceased, but in modern 
times all the property left by a deceased person is subject to 
the jurisdiction of the court and to the payment of debts if 
required for that purpose. 

Administration involves everything that may rightfully be done 
in the preservation of the assets of an estate, and the dealings 
of the executor or administrator with creditors, legatees, 
devisees or heirs. The jurisdiction and functions of the various 
courts of probate is prescribed by statute and the procedure 
is different in different states, so that it is necessary to con- 



EVERYDAY LAW 

suit local legal counsel in order to make sure that the proper 
procedure is followed. 

Administration is generally necessary where unpaid debts 
are left by the deceased, but as a general rule the heirs may, 
where there are no debts, divide the property in any manner 
agreed upon by them except in states by the laws of which 
an inheritance or succession tax is required to be paid after 
an appraisal of the estate. In such states regular administra- 
tion of the estate must be had and cannot be dispensed with 
by agreement of the heirs. 

Administration is necessary upon the estate of an infant, 
although he cannot make a will, but in many states adminis- 
tration is not necessary upon the estate of an adult who has 
left no debts but the heirs can make partition by mutual 
agreement. 

Administration should be had in the place where the deceased 
resided at the time of his death. If there is property situated 
in different states it is usual to probate the will at the place 
where the deceased lived and then to record a certified copy 
of the will and its "probate", or procedure by which it is 
established or proved, in the different places where the de- 
ceased had property, or in such other states take out addi- 
tional or what is termed "auxiliary administration." In case 
one dies away from home, it is not customary for any adminis- 
tration to be had in the place of death unless the law of the 
state requires an officer, known as a "public administrator", 
to take charge of the personal property the deceased may 
have had in his possession at the time of his death. A court 
cannot grant administration upon the estate of a non-resident 
who has left no property within its jurisdiction. 

If the deceased has left a will, the person appointed by the 
will to execute it, is called an "executor," or "executrix," and 
if he accepts and duly qualifies, he alone is entitled to receive 
from the proper court what are called "letters testamentary," 
that is written authority from the court to administer the 
estate, to which certificate is attached a copy of the will. If 
the deceased left no will, then the court appoints a suitable 

4 



ADMINISTRATION 

person who is called an "administrator," or administratrix." 
to administer under its direction the estate. In most of the 
states the nearest of kin to the deceased is entitled to be ap- 
pointed administrator, but in some a married woman is dis- 
qualified from acting as "administratrix" and some other per- 
son possessing the proper qualifications must be appointed. 
As a general rule any person who is capable of making a will 
may be an executor, and unless forbidden by statute, a married 
woman may with the consent of her husband be an executrix 
and so may an infant, but state laws often disqualify both 
married women and infants and generally disqualify a non- 
resident. Idiots and lunatics are incapable of becoming execu- 
tors or administrators. A person nominated as executor cannot 
be compelled to act, but may refuse to accept the appointment. 

If a will makes no appointment of an executor, one is ap- 
pointed to execute the will called an "administrator with the 
will annexed." If there is no will then the proper court ap- 
points an administrator. There may be one or more executors 
or administrators, and if there is more than one, they must 
all act jointly. 

Sometimes after an estate has been fully settled and other 
property not before distributed is found, it becomes necessary 
to appoint what is called an "administrator de bonis non," 
that is an administrator of the property which was not pre- 
viously administered upon and disposed of. 

It is always necessary to observe in administration the formali- 
ties prescribed by the law of the place where the deceased died, 
or where the property is situated, and hence an attorney should 
be consulted, although in many states the probate judge will 
make suggestions in order to enable the persons interested to 
avoid expense of counsel. 

If the will provides that the executor shall be without bond, 
it is not necessary for him to give security, but an adminis- 
trator is always required to give bond for the faithful per- 
formance of his duties and his commission, or letters of admin- 
istration, will not be issued until he has given the required 
bond. Even though the will provides that the executor shall 



EVERYDAY LAW 

not be required to give bond, creditors may, upon proper 
showing to the court, obtain an order requiring the executor 
to furnish bond. 

All the property of a deceased person is held liable for his 
debts, and the expenses of the last sickness and burial. As a 
general rule, personal property is first applied to the payment 
of debts and if sufficient the real estate will not be resorted 
to, but if necessary the real estate belonging to the deceased 
may be sold under the direction of the court. Property which 
the deceased held in a trust capacity does not constitute assets 
of his estate, but will be taken charge of by a successor in 
the trust, and if the deceased had only a life estate, the prop- 
erty will go to the person entitled to the remainder, that is 
to take the property after the life tenant dies. 

When an executor or administrator has given bond and re- 
ceived his credentials, he should publish notice of his appoint- 
ment, if required by local law, and make an inventory of all 
property belonging to or claimed by the deceased, except 
property held in trust, and have the personal property appraised 
if the statute requires it, and thereafter file a supplemental 
inventory for any additional property that may come to his 
knowledge. In some states it is not necessary under certain 
conditions to file any inventory. It is also the duty of an 
executor or administrator to attend to the decent burial of 
the deceased and the reasonable expense of such burial will 
always be allowed. In some states an administrator cannot 
collect rents unless ordered to do so by the proper court. 

An executor or administrator is required to use reasonable 
diligence and exercise such prudence, care and judgment in 
attending to his duties, as an ordinarily prudent and skillful 
man would use in regard to his own property. It is also neces- 
sary for him to keep a separate account of receipts and ex- 
penditures and deposit the money of the estate in a separate 
account, or invest it under the direction of . the court. He 
is not justified in engaging in trade with the funds of the 
estate or to use the funds of the estate in speculation or a 
hazardous undertaking, although he may continue the business 

G 



ADMINISTRATION 

of the deceased for a reasonable time under the direction of 
the court. An executor must follow the directions of the will 
so as to carry out the wishes of the deceased. 

Where the deceased was a partner, it is the general rule that 
the surviving partner has the right to administer the estate. 

An executor or administrator is authorized to employ legal 
counsel and should obtain the authority of the court in all 
matters concerning which his duty may be in doubt. 

Sales of personal or real estate are usually regulated by stat- 
ute and these statutory directions should be carefully followed. 
An executor or administrator cannot lawfully make any per- 
sonal profit out of the estate of the deceased, but must account 
for all profits made by him. 

The presentation, allowance and payment of claims is regu- 
lated by statute and the general rule is that an executor or 
administrator should pay no claims except under the authority 
of the court, especially when the estate may prove insolvent. 
Usually claims against an estate are divided into classes, the 
first is entitled to priority in payment and embraces the ex- 
penses of the last sickness and burial of deceased, next come 
taxes and debts due the government, next claims reduced to 
judgment, and after that such other claims as may be allowed 
by the court, or commissioners appointed for the purpose. It 
is doubtful whether an executor or administrator has authority 
to pay for a monument, or tombstone, without the authority 
of the court. If the estate is insolvent, certain claims are 
entitled to priority, among which are payments to the widow 
and minor children which are allowances given by law by 
way of dower or provision for temporary support and, after 
payment of the preferred claims, the balance is distributed 
pro rata among the creditors whose claims have been allowed. 
After payment of debts, it is the duty of the executor, or 
administrator to present his final accounts, give such notice 
as required by law and make distribution of the estate to those 
entitled thereto under the direction of the court. Care should 
be taken to make no payment either of legacies or debts with- 
out the sanction of the court, in order to avoid personal lia- 

7 



EVERYDAY LAW 

bility in case the assets of the estate prove insufficient. Gener- 
ally the compensation of an executor, or administrator, is 
regulated by law. 

[For further information see the subject of Wills.] 



CHAPTER III. 



AGENCY. 

AGENCY is the relation that exists where one party called 

£jL the "principal," authorizes another, called an "agent," 
JL .X* to act for him in dealings with third parties. Anyone 
who can do an act himself may be a principal and 
perform such act by an agent, except where there is a personal 
confidence reposed in him which requires such person to the 
act himself, as where the employment involves personal trust 
and confidence, in which case the party cannot appoint an 
agent to do it for him, or, if he is an agent himself, appoint 
a sub-agent. As for example, if a person has authority to sell 
property and make a deed, or where one is a broker, he can- 
not authorize another to sign a contract in behalf of his princi- 
pal. No person can authorize another to do an unlawful act 
or to do something forbidden by law. The capacity to act as 
agent generally depends upon the capacity in the principal to 
do the act himself. 

Neither idiots nor lunatics can appoint an agent, but a minor 
can appoint an agent to act in matters concerning which he 
can act, as for example, to purchase necessaries, such as cloth- 
ing, or arrange for board or schooling, but all such acts are 
subject to scrutiny to avoid imposition on the minor. Married 
women in most states are capable of appointing agents. 

Anyone who can act for himself may act as agent and even 
a minor can be appointed agent and do acts for another which 
he would not have capacity to do for himself. 

Agents may be either "general", that is having authority to 
act in all matters for their principal, or "special", that is having 
a limited authority. A principal is bound by all acts within the 
apparent authority of the agent; that is if a man holds out to 
the world another as having authority to do certain acts in 
such a manner as to convey to the world a reasonable infer- 
ence of the agent's authority, the principal is bound by all 
the acts done within the apparent scope of his authority. 

Again agents may be "express," that is appointed, either 
verbally or in writing, in express terms, or "implied", as where 

9 



EVERYDAY LAW 

from the conduct of the parties there is an implied authority 
on the part of the agent to do an act. An agent may appoint 
one to act for him who is called a sub-agent, that is an agent 
for an agent. The latter derives his authority directly from 
the principal and the sub-agent derives his authority from the 
agent who has been appointed by the principal. 

Agency can only exist by the will of the principal and with 
the consent of the agent, and hence it is always necessary that 
the principal shall in some manner, either expressly, or by 
inference from conduct for which he is responsible, appoint the 
agent and that this agency shall be accepted by the agent. 

There is no particular way in which an agent must be appointed, 
although in some cases the appointment must be in writing, 
as where authority is given to sell or convey real estate, sign 
checks, endorse notes or to act in some matter of that kind. 

Sometimes an agent is appointed by a writing called a power 
of attorney and where written authority is required by law, 
as to execute a deed or to make or endorse notes, the agency 
can only be created by such instrument in writing. Sometimes, 
as in the conveyances of real estate, the power of attorney 
must be acknowledged and recorded the same as a deed, so 
that the authority for the act may be on record. 

A person may do an act for another without authority, and 
this unauthorized act may be afterwards ratified by the principal, 
in which case the result is the same as if authority were origi- 
nally given. If an act done, or a contract entered into, by 
an agent without authority is illegal and void it cannot be 
ratified, but acts which are merely voidable can be ratified. 
"Void" means something which is without effect: "voidable" 
means something that can at the option of a party be set 
aside. Any person may ratify an unauthorized act of another 
in his behalf if he could originally have given authority to 
do the act or if he still has power to do it at the time of the 
ratification. Sometimes ratification will be implied, as where 
the principal has accepted the beneficial results of the act of 
the unauthorized agent. 

If an agent is appointed to do some particular act, when 

10 



AGENCY 

this act is performed the agency is terminated by that fact. 
An agent also may be appointed for a specified period, after 
which the agency ceases. 

The agent's authority may be revoked at any time unless 
such agent has an interest in the matter entrusted to him, as 
for example, when property is pledged and the agent is author- 
ized to sell the property in case the conditions of the pledge 
be not performed, or if he has some pecuniary interest in the 
subject matter of the agency, as a commission, in such cases 
the agency cannot be revoked, but continues until the act is 
performed, if required, or the object of the agency is accom- 
plished. If an agency is created for a consideration, it cannot 
be revoked by the principal unless the authority for such revo- 
cation is reserved. For example, if authority is given an agent 
to sell certain property and pay over the proceeds to another 
party. The death of the principal constitutes a revocation of 
the agency, and as does, in some cases, his insanity. As a rule 
the revocation of an agency must be communicated not only to 
the agent, but also in some way to the public so that persons 
will not be led to deal with him not knowing that his authority 
has been revoked. The agent can abandon his agency or 
renounce it. When a partnership is dissolved, it works a re- 
vocation of the authority of an agent of a firm. 

Every person who deals with an agent is bound to inquire 
as to his authority and deals with him at his peril. This rule is 
modified to the extent that acts done within the apparent 
scope of the authority of the agent are binding upon the princi- 
pal. For instance, the principal will not be bound by acts in 
excess of the agent's authority if the facts and circumstances 
of the case are such as to put persons dealing with the agent 
upon inquiry as to his authority. If an agent has authority 
to do an act and in doing it violates secret instructions, the 
principal will still be bound, if the authority was general enough 
so as to give the party dealing with him reason to believe that 
such agent was acting within his authority. 

An agent has authority to do all such acts as are reasonably 
necessary for the transaction of the business in question, for 

11 



EVERYDAY LAW 

example, the customs and usages in the trade or business in 
which the agent is engaged form part of his authority and 
such customs and usages are presumed to have been known 
to his principal. 

Where the authority is given by a writing, the power of the 
agent is confined to the limits marked out by such writing, 
and parties dealing with an agent must inform themselves of 
the extent of his authority. 

An agent is bound to act in entire good faith and loyalty to 
his principal and if he fails to do so, he will be liable for any 
loss which results. An agent must not, except with his princi- 
pal's consent, enter into any transaction relating to the sub- 
ject-matter of his agency in which he represents adverse or 
hostile interests, nor must he engage in any business on his 
own account of the same character as that of the principal in 
opposition thereto. He cannot deal with the subject matter 
of the agency so as to make a secret profit, but must account 
for all profits made out of the business of the agency. In all 
dealings with his principal on his own account the agent must 
act with entire good faith and make a full and fair disclosure 
of all the facts relating to the transaction. He cannot act for 
an adverse party and his principal at the same time, but can, 
as the Scripture says, only serve one master. He must obey 
instructions and is liable to his principal for any loss or damage 
resulting from a violation of instructions, although there may 
be cases of necessity arising from a sudden emergency, such 
as not only to justify, but require a departure from the strict 
letter of his instructions. If the agent under such circum- 
stances acts as an ordinarily careful man would do he will not 
be liable. An agent must exercise such diligence and care as 
an ordinarily prudent man would exercise in the performance 
of his own business. 

Although the agent acts without compensation, he is still 
liable for negligence in the performance of such business, or 
for breach of duty toward his principal. 

The principal is bound to give his agent opportunity and' 

12 



AGENCY 

all necessary facilities for transacting the business entrusted to 
him and the agent has a right to compensation. 

An agent is personally liable to third parties with whom he 
deals if he violates his instructions or makes an unauthorized 
contract, or if he is guilty of fraud or any other act whereby, 
because of his negligence or wrong, the principal is not bound 
by his act. 

In dealing with corporations it must be remembered that 
all officers of associations or corporations are agents and per- 
sons dealing with the agents, or officers of a corporation are 
bound to take notice of its charter. A corporation cannot 
be bound by acts in excess of the powers conferred upon it by 
the charter. Ordinarily a person dealing with a corporation 
is not bound to take notice of the limitations contained in 
the by-laws. 

An agent, in signing any note, or contract, for his principal, 
should be careful to sign the name of the principal first and 
then add his own name prefixed with the word ''by", or "per". 
For example, if John Smith executes a contract or note for 
Peter Jones, he should sign it, "Peter Jones by John Smith 
agent", and not "John Smith, agent for Peter Jones." In the 
latter case he might be held personally liable because the 
words, "agent for Peter Jones" would be only words descrip- 
tive of who John Smith is. 

Power of Attorney 

A "power of attorney" is a formal writing executed by a person 
authorizing an agent to do some act. It may be in the fol- 
lowing form, due care being taken to make the authority defi- 
nite and certain. 

I, John Smith of the City of Detroit, Michigan, hereby 
appoint Henry Doe of the City and State of New York my 
true and lawful attorney for me and in my name and with all 
the power I might exercise if personally present, 

x to sign checks on the First National Bank of Detroit, 
Michigan. 

x to execute in my name any and all promissory notes for such 
amounts and for such length of time and rate of interest as he 
may deem best. 

13 



EVERYDAY LAW 

x to collect any and all debts due me from any and all 
persons and give proper receipts therefor. 

x to collect, compromise or adjust any and all claims I may 
have against the Jones Manufacturing Company of New York, 
execute a proper release thereof and endorse and collect any 
check or draft received in payment thereof. 

x to sell any and all real estate I may have in the State of 
New York and execute a warranty deed therefor in the usual 
and customary form. 

(Insert the desired one of the above specifications marked * 
which is desired, or name any other act which is to be done 
by the agent then conclude;) 

Hereby ratifying and confirming all that my said attorney 
may do by virtue of the premises. 

I hereby authorize said attorney to substitute by writing 
signed by him any other suitable person to perform the acts 
herein specified. 

In Witness Whereof, I have hereunto set my hand and seal 
this 10th day of June, 1913. 

John Smith (Seal) 

Generally a power of attorney should be acknowledged before 
a Notary Public or clerk of a court in the following form: 

STATE OF MICHIGAN ) ss 
COUNTY OF WAYNE j 

On this 10th day of June, 1913, before me, the undersigned 
a Notary Public in and for said county, personally came John 
Smith, to me known to be the same person named in and who 
executed the foregoing instrument as party thereto and ac- 
knowledged the same to be his free act and deed for the uses 
and purposes therein expressed. 

IN WITNESS WHEREOF, I have hereunto set my hand 
and official seal on the day and year first above written. My 
term of office expires June 10, 1916. 

Henry Doe, 

Notary Public. 

14 



CHAPTER IV. 



ARBITRATION. 

THE law favors the settlement of disputes out of court 
and hence two or more persons having a disagree- 
ment may submit the controversy to the judgment of 
one or more persons of their choice who act as judges 
and are called "arbitrators." In most states the law provides 
for the submission of disputes to arbitration, and that, when 
the decision of the arbitrators is made, it may be filed in 
court and a judgment entered thereon. Men may agree to 
leave a dispute to arbitrators either by written or verbal 
agreement, but all agreements to submit a controversy to arbi- 
tration are subject to revocation and no executory agreement to 
submit a matter to arbitration can be enforced. An apparent 
exception to this rule is the provision in fire insurance policies, 
that in case of loss the amount of loss shall be determined, 
in case of disagreement, by appraisers, and no suit shall be 
brought until the amount of the loss is settled by appraisers. 
This is what is called a condition precedent to bringing suit 
and is binding. The appraisers arbitrate the question as to 
the amount of the loss. 

In all other matters at any time before hearing of the arbi- 
trators is begun, a party may back out, but he may be liable 
for damages for so doing. The provision of the statutes is 
generally that the persons selected as arbitrators shall take 
an oath that they will perform their duties faithfully and 
impartially and give notice to the parties interested, of their 
appointment and time and place of hearing the evidence presented 
and when they have agreed upon their finding the same shall 
be filed in the proper court. 

Arbitrators are bound to be fair and impartial and to only 
listen to such evidence as may be produced openly by the 
parties in the presence of each other. 

The usual course pursued under an agreement for arbitration 
is for each party to select an arbitrator, and in case the two 
cannot agree they select a third arbitrator, called the "um- 
pire," and his decision determines the finding which is called 
an "award". 

15 



CHAPTER V. 



ASSOCIATIONS. 

ANY number of persons may associate together for «?- 

jUL particular purpose not unlawful; such association may 
jL -11. receive a charter from the state in which case it 
becomes a corporation, or it may remain unincorpo- 
rated and then it is called a "voluntary association". 

Churches, lodges and clubs are generally voluntary associa- 
tions and their articles of association, or the agreement to which 
all members organizing it subscribe, and those afterwards join- 
ing it subscribe when they become such, regulates the admis- 
sion of new members, defines their qualifications and specifies 
in what manner and for what causes membership may be 
terminated and the objects for which such association is 
formed and the manner in which such objects are to be accom- 
plished or the business, or undertaking, carried on. 

The Courts will not interfere with the proceedings of these 
association, or restore a member who has been expelled, unless 
some property right is involved. If no property right is involved 
a member may be expelled in any way and he has no remedy. 
The rights of the members and their relations to each other 
are determined or governed by the articles of association, which 
may be called a constitution, and the by-laws; so far as the 
responsibility of the members to each other is concerned, the 
members will not generally be partners; yet, while a voluntary 
association is not strictly speaking a partnership, the members 
may be deemed partners so far as the obligations of the asso- 
ciation to outsiders are concerned and become personally liable. 
This liability is based upon the law of agency; for example, if 
a member of a club buys articles for the use of the club, it is 
presumed that he was the agent of the members for that pur- 
pose and all are liable, or at least all who participated in 
voting for the purchase. 

The meetings of an association are governed by the constitu- 
tion, or articles of agreement, of the society. Special meetings 
may be held if a notice is given stating the purpose of the 
meeting, but no business can be transacted at such meeting 

16 



ASSOCIATIONS 

except that mentioned in the call. If the constitution is silent 
as to the number of members who constitute a quorum, the 
acts -of any number of members assembled in response to a 
regular call, or at the meeting required to be held by the 
terms of the constitution, are valid, but if the constitution 
prescribes the number of members requisite to form a quorum, 
that number must be present at the meeting in order to trans- 
act business. A fundamental rule, applicable to all associations, 
partnerships and corporations, is that within the express or 
implied terms of the articles of association or constitution, or 
agreement of the members, the majority has power to bind the 
entire membership, but the majority, in order to bind the 
minority, must comply with every formality prescribed by the 
company's or association's charter or articles of association for 
the transaction of business and is bound to exercise the utmost 
fairness and good faith to the minority and action must be 
taken at a properly called meeting, notice of which must be 
given if required by the by-laws. 

(For information as to incorporated bodies or associations 
see the subject of Corporations.) 



17 



CHAPTER VI. 



BAILMENT. 

WHEN a person delivers personal property to another 
on depposit, or for some particular purpose upon an 
express or implied contract that after that purpose 
has been accomplished the property will be returned 
to the person who delivered it, or disposed of as he may have 
directed, the act is called a "bailment". For example, the 
owner may take a watch to be repaired, or a livery stable 
keeper may let out a horse, or a man may take materials to 
be made up into some article, as cloth for a suit of clothes; or 
he may deliver goods to a warehouse keeper to be kept for 
him, or he may deliver goods to a common carrier to be trans- 
ported, or he may send goods to a commission house to be 
sold on his account. A transaction of this kind is in law a 
"bailment," and the person who delivers the goods is called 
the "bailor" and the person who receives them is called the 
"bailee." 

The contract of a bailee is sometimes express, as where a 
warehouse man receives property to be stored and gives a 
warehouse receipt for it; or a common carrier receives articles 
to be transported from one place to another, in which case a 
receipt is usually delivered by the bailee to the bailor, such 
as a bill of lading; or the contract may be implied, or inferred 
from the circumstances, as where a man borrows some article 
that he will return it, or hires a horse that he will use it 
carefully, or where an article is pledged for a loan, as when a 
watch is pawned with a pawnbroker or stocks or bonds pledged 
to a bank for a loan, that when the loan is paid they will be 
returned. 

The law divides bailments into three kinds; first where the 
bailment is for the benefit of the bailor, or some person whom 
he represents, as when a man deposits any kind of personal 
property with someone for safekeeping; second, those for the 
benefit of the bailee or some person represented by him, as 
where a horse is loaned to a friend, or a wagon is borrowed. 
A third class consists of those which are for the benefit of both 

18 



BAILMENT 

parties, as where a horse is hired out, or the use of any other 
thing is hired for temporary purposes, for which use some con- 
sideration is to be paid, or where a carrier undertakes to 
transport goods in which case compensation is paid for the 
carriage of the thing. 

The degree of care which is required of the bailee differs 
according to the nature of the transaction. In the first class 
the bailee is only required to exercise such ordinary care as 
he exercises in regard to his own property. In the second class 
he is required to exercise a higher degree of care and take every 
reasonable precaution to avoid loss or injury to the article 
intrusted to him. In the third class the degree of care to be 
exercised is according to the nature of the transaction and the 
conditions of the contract and except in the case of a common 
carrier, the bailee is only required to exercise such care as an 
ordinarily prudent and careful man would exercise in regard to 
his own property. The finder of lost property is a bailee for 
the owner. 

When a. person receives the goods of another to keep without 
recompense, and he acts in good faith keeping them as his 
own, he is not responsible for their loss or injury, as by fire or 
robbery. This is for the reason that he derives no benefit 
from the transaction and is only responsible for bad faith or 
gross carelessness. If a person without expectation of reward 
undertakes as a friendly act to drive a horse from a residence 
to the stable, he is only liable for loss if he is guilty of care- 
lessness or reckless conduct. 

A borrower on the other hand who receives the entire benefit 
of the transaction must take special pains to take proper care 
of the thing borrowed and he is responsible for even a little 
neglect. 

In the third class there is a mutual advantage, as where an 
article is pledged for a loan of money, or where a person, as 
for example, takes cloth to a tailor to be made up into clothes. 
In such cases both parties stand on an equal footing and the 
bailee can only be held responsible in case of loss or injury, 

19 



EVERYDAY LAW 

where he has failed to use ordinary care and reasonable pru- 
dence in the care of the article intrusted to him. 

No one can become a bailee without his consent, and there- 
fore there can be no bailment of any article unless the party 
accepts the responsibility. There may be a constructive bail- 
ment, as where a lost article is found and taken in charge by 
the finder. Any kind of personal property can be the subject 
of a bailment and anyone who can make any kind of a con- 
tract may become a bailee. In the case of common carriers, 
warehouse men, or wharfingers, who hold themselves out to 
the public as willing to undertake the duty of caring for or 
transporting merchandise, there is an obligation on their part 
to receive goods in their particular line from anyone who offers 
them and they cannot refuse to receive them. A bailor may 
not be the absolute owner of an article, but it is sufficient if 
he can assert his right of possession as against everyone but 
the true owner. For example, an agent can deposit or deliver 
articles or merchandise to some one for the purpose of having 
something done in regard to them, without parting or attempt- 
ing to part with the ownership. The bailee has the right, 
except as against the bailor, to retain the article for his charges 
and he has a lien on the article for its hire or for the value 
of the services which he performs in regard to it. 

The ordinary cases of bailments are where an article is 
delivered to another for repairs, or where money or valuables 
are placed in the charge of a safe deposit company, or where 
personal property is pledged for a loan, or deposited in a ware- 
house for safekeeping, or delivered to a carrier for transporta- 
tion. Except where articles are taken to a shop for repairs, 
or pledged to a pawn broker, or hired for temporary use, as 
a horse from a livery stable, the contract is usually in writing 
and evidenced by such writings as a warehouse receipt, bill of 
lading, or other kind of written acknowledgment. 



20 



CHAPTER VII. 



BANKRUPTCY. 

A PERSON unable to pay his debts in full is said to be 
"bankrupt," or "insolvent". A distinction is made 
between the two words: a person is "bankrupt" when 
he is unable to pay his debts as they mature in the 
ordinary course of business, and "insolvent" when his liabilities 
are greater than the fair cash value of his property. Up to a 
comparatively recent period a person either insolvent, or bank- 
rupt, not only was liable to have his property seized by credit- 
ors, and he himself imprisoned, but the liability continued 
indefinitely. The law makers determined not only that the 
right of the creditor to pursue his debtor should be limited 
to a certain period by statutes of limitation, but that the bank- 
rupt might, on surrender of all his property to be distributed 
pro rata among his creditors, receive a discharge from all 
liability and thus be enabled to make a new start. This was 
the reason for the enactment of bankruptcy laws. 

Under the Constitution Congress has the power to establish, 
and has established, a bankruptcy code whereby an insolvent 
person may avail himself of its provisions and, by compliance 
therewith, obtain a discharge from all his debts; or creditors 
may, without the consent of the debtor, have him declared 
bankrupt by the court and his property taken possession of by 
authority of the law and sold and the proceeds distributed 
equally among his creditors under the direction of the court. 

By Act of Congress the United States District Courts are 
made courts of bankruptcy and a form of procedure is estab- 
lished whereby a bankrupt may have himself declared such 
on his own application, or his creditors may compel him to 
become bankrupt. The federal bankruptcy act supersedes the 
state insolvency laws, or those state laws which provided how 
an insolvent might have his property equally distributed among 
his creditors but did not provide how he could be discharged 
from liability for any deficiency of the assets to cover liabili- 
ties. The federal act provides that any person owing debts 
which he is unable to pay may, upon application, be declared 

21 



EVERYDAY LAW 

bankrupt, and, if he has fairly and fully surrendered all his 
property and complied with the requirements of the law re- 
ceive a discharge from all his debts. 

A discharge in bankruptcy, however, does not release a bank- 
rupt from taxes or debts due the government; or liability for 
obtaining money by false pretenses; or judgments for wilfull 
and malicious injury to the person or property of another; or 
for alimony allowed for the maintenance or support of wife or 
child; or a judgment for seduction of an unmarried female; or 
criminal conversation, that is damages for illicit relations with 
the wife of another, or debts that were created by fraud, 
embezzlement or defalcation while acting as public official or 
in any fiduciary capacity. 

A bankrupt also may be prevented from obtaining his discharge 
by failure to comply with the provisions of the law in other 
respects; as where a trader has failed to keep books of account 
or has been guilty of other reprehensible conduct, such as hav- 
ing concealed his property with intent to defraud his creditors. 
A discharge in bankruptcy may be revoked if obtained by 
fraud. 

Any person owing debts which he is unable to pay may have 
the benefit of the bankrupt act by applying in proper form to 
the U. S. District Court. Any natural person, except a wage 
earner, or farmer, and any corporation, except a municipal, 
railroad, insurance or banking corporation, owing debts to the 
amount of one thousand dollars or over, may be adjudicated 
bankrupt on the proper application of creditors. An involun- 
tary petition against a bankrupt may be filed by any three or 
more creditors who have proveable claims against such person, 
or corporation, amounting to five hundred dollars or over, or, 
if all the creditors are less than twelve in number, anyone of 
such creditors having a proveable claim for more than five 
hundred dollars, can file an involuntary petition in bankruptcy 
against the debtor. 

If an involuntary petition is filed, if the charges are denied, a 
trial is had to determine whether or not the defendant is bank- 
rupt and whether he has done any of the acts amounting in 

22 



BANKRUPTCY 

law to acts of bankruptcy. The acts of bankruptcy are con- 
cealing or removing property by a debtor with intent to delay 
or defraud creditors or permitting it to be done; or trans- 
ferring while insolvent any portion of his property with intent 
to prefer one creditor over another; or permitting, while insol- 
vent, a creditor to obtain a preference by legal proceedings, or 
if the insolvent has applied for a receiver, or trustee, for his 
property, or made a general assignment for the benefit of his 
creditors. 

Upon adjudication the matter is referred to an officer called 
a "referee in bankruptcy,' ' before whom a meeting of the credit- 
ors is held to select a trustee to administer the estate, and the 
administration is in charge of such trustee acting under the 
superintendence of the court or the referee. 

Under some circumstances, in order to preserve the property 
where an involuntary petition in bankruptcy has been filed, 
or in cases of a voluntary petition, before a trustee is elected, 
the court will appoint a receiver for the property, or order the 
marshal to take charge of it in order to preserve it for the 
creditors. 

The present bankrupt law of the United States was passed 
in 1898 and amended in 1910, and has proved beneficial in its 
operations. 



23 



CHAPTER VIII. 



BANKS AND BANKING. 

A BANK is an institution for receiving deposits, making 
loans and generally for the dealing in money, exchange, 
. (which consist of drafts or orders for the payment of 
money drawn on persons or firms, or banks, in other 
cities or countries) and securities, such as bonds or promissory 
notes. The business may be conducted by corporations or 
individuals, although under the laws of most states only cor- 
porations can act as bankers. Banks are either State or Na- 
tional. Savings banks also constitute a class by themselves. Of 
late years trust companies have been formed under state laws 
to unite with the business of banking the acting as adminis- 
trator, executor, guardian or trustee. These trust companies 
while practically banks operate under special laws defining 
their powers. Banks receive deposits of money, make loans, 
which are called i 'dis count s," buy and sell negotiable paper 
and bonds and buy and sell exchange, or drafts, on other cities, 
or countries. National banks have the power under the act 
of Congress to issue their notes, secured by the deposit of 
government bonds, which form part of the money, or currency, 
of the country. 

Unless forbidden by statute banking is open to all persons, 
but as the business is public in its nature the state for the 
better protection of its citizens has power to regulate it and 
confine it to corporations organized under general laws and 
supervise their operations. 

Corporations for the transaction of banking business are 
organized either under state or national laws with capital 
stock and stockholders, and those who own stock in national 
banks are liable for an additional amount equal to the face 
value of their stock, should such bank become insolvent. This 
is called double liability. A bank may by its by-laws or char- 
ter have a lien, or preferred claim, on the stock of the stock- 
holder for any indebtedness due from him to the bank. The 
business of the bank is transacted by its principal officers, 
generally known as president and cashier, and its board of 

24 



BANKS AND BANKING 

directors. The powers of the officers are governed by the 
charter and by-laws, the statutes of the state and the laws 
of agency. The directors usually meet periodically for the 
transaction of business and sometimes have a committee known 
as the "discount committee," to pass upon loans. In smaller 
towns the cashier of a bank is generally its manager and has 
power to do such acts as are within the apparent scope of 
his authority as such. Under the laws of the State the officers 
of a bank may be criminally liable under certain circumstances, 
as in receiving deposits knowing that the bank is insolvent. 

The dealings between a depositor and a bank are those of 
debtor and creditor, in fact the depositor loans his money to 
the bank to be repaid at his request in such amounts and at 
such times as he may make demand therefor, or at an agreed 
time in the future. In the latter case the depositor receives 
what is known as a " certificate of deposit' ' payable at the 
agreed time in the future. In the former case the bank opens 
an account on its books with the customer and gives him 
usually what is called a "pass book," in which entries are 
made of the deposits, and periodically the checks are returned 
to the depositor and the gross amount entered on the book 
showing the balance remaining to his credit. This is called 
having the book balanced. A customer is bound by the by- 
laws of the bank if he knows of them and is also bound by the 
banking customs of the locality if reasonable. 

Part of the business of a bank is buying promissory notes, 
or commercial paper, which is called "discounting". Discount 
is another word for the interest deducted from the amount 
loaned by the bank at the time of making it, and is used to 
denote the act of giving money for a bill of exchange or prom- 
issory note deducting the interest. 

The taking of legal interest in advance is not usury but is 
allowed only for the benefit of trade. 

There is a difference between buying a bill of exchange and 
discounting it, the former word is used when the seller does 
not guaranty its payment and is not accountable for its non- 
25 



EVERYDAY LAW 

payment as where he writes his name on the back of it pre- 
fixing the words, "without recourse." 

Part of the business of a bank is to make collections of drafts 
drawn by a depositor upon his debtors, or checks or drafts 
deposited by him, and where a bank takes paper for collection 
it is bound to use ordinary care in the selection of agents 
through whom to make the collection and is only liable for 
negligence in so doing. If it has given the depositor credit 
for a draft as cash if such draft is dishonored it has the right 
to charge the same back to him. If it receives forged paper 
on deposit, it may upon discovery of the spurious nature of 
the instrument demand reimbursement from the customer within 
a reasonable time after the discovery of the defect. If the 
bank is insolvent at the time of receiving a deposit it is fraud 
to receive it and the bank acquires no title to paper so re- 
reived. In collecting commercial paper under special instruc- 
tions, a bank and all its subordinate agencies undertaking the 
service, and having a knowledge of such instructions, is bound 
by them. In some states the agent is responsible for the 
conduct of any subordinate employed by it in making a col- 
lection as fully as if it had performed the entire service itself, 
but as a rule the bank is only bound to select one who is, so 
far as known, competent and worthy of trust and is not liable 
in case of a failure of an agent selected under such circum- 
stances. In making collections the bank must use due care 
and diligence, especially with regard to presentation, protest 
and the like. That is to say, it must not delay presenting, or 
forwarding, collections and if payment is refused it must have 
the draft or note, protested if protest is not waived. It has 
no authority to renew an obligation or give an extension of the 
paper unless specially authorized, and it can only receive pay- 
ment of collections in money. It is also bound to remit the 
proceeds promptly upon receipt of the same. A collecting bank 
is liable for failure to use diligence in presenting paper for 
acceptance or payment, for not giving due notice of dishonor 
and having the paper protested, and while it may relieve itself by 
contract from the negligent acts of its agent, it cannot relieve 
itself by contract from the consequences of its own negligence. 

26 



BANKS AND BANKING 

The orders drawn by a customer on a bank are called 
"checks." Where a check is marked good by a bank, it is 
called a "certified check". Sometimes instead of certifying a 
check the bank issues therefor a cashier's check, that is its 
own check. The drawing of a check on a bank does not bind 
the fund against which it is drawn until the bank has notice 
thereof, or until the same is presented for payment. The de- 
posits made by trustees, executors, administrators, assignees 
for the benefit of creditors and public officers, should be made 
in the name of the officer in his official or trust capacity. If 
a bank, having knowledge that a fund is held by a customer 
in trust, applies it to the personal indebtedness of the depositor 
it is liable therefor. 

In many states savings banks are created with particular 
powers and duties defined by statute. The method of dealing 
with a savings bank is somewhat different from that of the 
ordinary bank, in that the deposits can only be withdrawn by 
presenting the pass-book, and sometimes the deposits cannot 
be withdrawn except by giving notice of the intention to with- 
draw a certain time in advance of the withdrawal. This is 
because a savings bank loans out the money of its customers 
on securities payable at distant dates and is not prepared and 
cannot pay its depositors if all make demand for payment at 
the same time. The business and powers of savings banks 
are usually defined by statute. 

It will thus be seen that a bank may maintain two kinds of 
dealings with a depositor; it may be his debtor with respect to 
deposits and his agent as in the collection of drafts drawn by 
him. A bank being only a debtor is absolutely liable to its 
depositor for the loss of a deposit, even though such loss may 
occur because of circumstances entirely beyond its control. A 
bank, however, may receive a special deposit of stocks or bonds, 
or other property, which are to be kept intact and in such 
case it is only bound to use the same care as it would exercise 
in keeping its own property of a similar character, and whether 
or not proper care has been taken is in case of loss a question 
of fact to be determined from all the circumstances of the 
case. 

27 



EVERYDAY LAW 

For many deposits a bank issues its certificate of deposit 
payable in six months or a year after its date, and it is un- 
certain in law just what the character of such a certificate of 
deposit is whether it is a note or a receipt for money but as a 
general thing the certificate is negotiable and is governed by 
the same rules which apply to promissory notes. 

It is a custom for persons often to exchange checks, which 
are called "memorandum checks," and also to give post-dated 
checks. Where two persons exchange checks which are post- 
dated, each agreeing to meet his check at maturity, the failure 
of one to do so is no defense if such check has been negotiated 
to a bona-fide holder who has taken the check in due course 
of business; and where checks are exchanged for mutual accom- 
modation neither can sue the other on his check until he has 
paid the one given by him. 

As a rule a bank is protected in paying out a deposit only 
when it has an order from a depositor himself or his author- 
ized agent. A president of a corporation is not authorized by 
virtue of his office alone to draw corporations checks. The 
authority must be given by some resolution of the directors 
or by a by-law. 

'Where there are two or more executors or administrators 
either of them can sign a check and it will be good without 
the signature of the other, but where a deposit is made by two 
or more trustees all must sign a check. Where money is 
deposited by a public officer whose term has expired the de- 
posit is subject to the order of his successor. 

A bank is not authorized to pay a post-dated check until its 
date, as the presumption is that the maker has an inadequate 
fund at the bank at the time, but will have enough when the 
date of the check arrives. A check given in the ordinary 
course of business for a debt is not payment of the debt until 
it is paid; if payment be refused without the holder's fault he 
may resort to the original indebtedness. 

A person receiving a check on a bank in the same place must 
present the check the same day, or at the latest the following 
day, but if the holder of the check and the bank are in differ- 

28 



BANKS AND BANKING 

ent places the check must be forwarded for presentment on 
the day after it is received. 

A bank is bound to pay a depositors check if it has the funds 
to his credit, but if the check exceeds the deposit ordinarily 
the bank may decline to pay it, although if it wishes it may 
credit the amount of the deposit on the check. If the bank 
refuses to pay a check when it has sufficient funds on deposit, 
and there is no good excuse for the refusal, the depositor is 
entitled to sue the bank for damages. Generally the holder of 
an unaccepted check has no right to sue the bank for refusing 
to pay a check, although in some instances a different rule 
applies. If the bank accepts the check it is bound to pay it. 

It is a general rule that the drawer of a check can stop pay- 
ment of it at any time before the bank accepts it, but the 
drawer of the check is liable to the holder for the consequences 
of the refusal. The death of a maker of a check, as a rule 
operates as a revocation of the check, but if a bank pays the 
check before it learns of the drawer's death, such payment is 
justified. In some states however the check operates as an 
assignment of sufficient funds to pay it and in that case the 
death of the drawer would not operate as a revocation. 

Where a check is certified by the proper officer of a bank 
it is an appropriation of so much of the money of the depositor 
as is necessary to pay such check. If a bank certifies a forged 
check it must stand the loss unless it has some recourse on the 
person who has presented it. The bank is presumed to know 
the signature of its customer and if it pays a forged check 
it cannot charge the amount to his account unless the depositor 
has been negligent, as when the drawer has prepared his check 
so carelessly that it can easily be altered; in that event only 
himself is to blame and the bank cannot be held liable for the 
consequences of such negligence. When the bank book is 
balanced and checks returned it is the duty of the depositor to 
examine all checks and endorsements thereon within a reason- 
able time and report any forgeries or errors. After a reasonable 
time has elapsed the depositor, having failed to examine the 
checks at the proper time, cannot recover from the bank the 

29 



EVERYDAY LAW 

amount paid on checks which have been discovered to be 
forgeries, or not properly endorsed, without proof that the 
bank could by proper care and skill have detected them. 
Money paid by mistake on a forged check cannot generally be 
recovered from the payee if payment has been made to him. 
A bank must always use reasonable diligence in giving notice 
of a forged check after its discovery, but mere lapse of time 
between the time of payment and notice of the forgery will 
not deprive the bank of the right to recover the money. If 
a bank pays a forged check it has no recourse against the 
depositor whose name is forged. An endorsement by a person 
bearing the same name as the payee, but who is not the real 
person, is a forgery and the check must be paid by the bank 
to the true owner of the paper. 

If a bank holds a customer's paper or a debt is due the 
bank from a depositor and his deposit is sufficient to meet the 
obligation, the bank usually has a right to apply such deposit 
to the payment of the debt, but it cannot apply for the purpose 
any trust funds held by the depositor. A bank cannot apply 
the deposit to an indebtedness of the customer which has not 
matured, although in some states, if the depositor becomes 
insolvent before the maturity of the debt, the bank may apply 
the deposit to the payment of the debt, but a different rule 
prevails in other states and the insolvency of the depositor 
gives the bank no right to retain the deposit for a debt which 
has not matured against a checkholder who in good faith pre- 
sents his check before the maturity of the debt. 

In some states if a person makes a note, or other obligation, 
payable at the bank, it is equivalent to a request to the bank 
to pay it out of any funds of the maker on deposit, but usually 
there must be a special request to the bank to pay such paper. 

In the large cities, the banks usually appoint an agency for 
the exchange of checks on each other called a "clearing house". 
At a certain hour each day a messenger from each bank pre- 
sents at the clearing house all checks which it has received the 
day before on deposit and mutual exchange of such checks 
among the messengers of the banks represented is made, so 

30 



BANKS AND BANKING 

that each bank receives credit for the checks on the other 
banks it has presented and is charged with the checks pre- 
sented by the other banks on it, and if a balance is due from 
any bank to the clearing house it is collected during the day 
from the debtor bank and if any balance is due to any bank 
it is paid from the collections of debits. These clearing houses 
have rules for the regulation of their business and relating to 
the time for return of a check afterwards found not good and 
such rules are binding upon all the banks who have agreed 
to them. 

(For further information as to checks, drafts and promissory 
notes, see the subject "Negotiable Instruments.") 



31 



CHAPTER IX. 



y BONDS. 

IN law a bond is simply an obligation under seal to pay a 
certain sum of money. Formerly great importance was 
attached to a seal and there was a difference between 
a simple promise, or contract, signed by a party and one 
to the signature to which was attached a seal. The seal was 
an impression of a device on wax affixed just after the signa- 
ture. Gradually a scroll came to be substituted for the wafer, 
or wax, upon which was an impression of the seal, and at the 
present time seals have come into disuse except corporate or 
official seals, and in some states private and personal seals 
have been abolished by statute. 

There is some difference between various kinds of bonds, as 
for example those given by a public officer, or public official, 
or officer of a corporation, to insure the faithful performance of 
his duties, and a bond issued by a corporation, or individual, 
to secure the payment of money. A bond for payment of money 
is simply a more elaborate writing, in which is contained, gen- 
erally not only the promise to pay money, but also a recital of 
the security given for the payment, as for example, a corpo- 
rate bond recites not only the obligation to pay the money, 
but what security is given for this payment and the conditions 
under which the security given may be enforced, as by a sale 
of the specified property. This kind of a bond may be given 
by an individual or a business corporation, or a municipality. 

Most public officers are required by law to give a bond for 
the faithful performance of. their duties in a specified sum and 
with security. Corporations now exist whose business is to 
become sureties on bonds. A bond may be given on an appeal 
from a judgment to secure its payment, in which case it is for 
double the amount of the judgment as a usual thing, and with 
sureties to be approved by the court. Bonds given by a munici- 
pality, as for example, a state, county or city, are only valid 
when authorized by law and are pledges of the public credit, 
and are sold on the reputation or resources of the municipality. 
Railroad and other corporate bonds are usually secured by mort- 

32 ^ 



BONDS 

gage or deed of trust, or pledge of corporate securities placed 
in the hands of a trustee. A municipal bond generally recites 
the authority under which it was issued and the acts done in 
accordance with the statutory requirements, and to it are 
attached what are called interest coupons, or interest notes; 
for example, if a municipal bond runs ten years with the in 
terest payable semi-annually the bond itself recites the promise 
to pay the principal sum and to it are attached twenty interest 
notes maturing every six months from the date of the bond. 
These are called "coupons" and recite that they are for interest 
on a bond referred to by number. If a railroad issues bonds 
they are also in much the same form and with coupons. Bonds 
may be registered, that is they are recorded with the name of 
the owner, usually by a trust company, and the bond recites 
that it is registered in the name of the owner, and the semi- 
annual, or quarterly, interest is paid by the debtor corpora- 
tion by checks mailed to such owner. 

The person or corporation making the bond is called the 
"principal," or "obligor," and the person to whom the bond 
is given or is payable is called the "obligee". 

Bonds given to secure the performance of some duty are for 
a specific sum, called the "penal" sum, which is for say ten 
thousand dollars, with a condition that if the duty is performed 
the bond is to be void; thus if a man takes an appeal from a 
judgment rendered against him, he gives a bond for double the 
amount of the judgment, which bond is to be void if on appeal 
the judgment is affirmed and is paid. A recovery on a bond 
of this kind can only be for the amount of the judgment, 
interest and costs, or if it is given to secure the performance 
of some work, as by a contractor, only the amount of the loss 
as security against which the bond was given, can be recovered. 

The bonds for the payment of money, such as municipal or 
corporate bonds, are the most common and are negotiable 
instruments and pass by delivery or assignment, as the case 
may be. A bond may be payable to bearer with the interest 
coupons also payable to bearer, in which case the property in 
the bond passes by delivery or if registered the method of trans- 

33 



EVERYDAY LAW 

fer is provided for in the bond; ordinarily an assignment is made 
which is registered or recorded. 

The essentials of a bond are, that it must be properly author- 
ized, executed and delivered, upon a sufficient consideration, by 
competent parties for a purpose not illegal. Municipal bonds 
must be issued in precise accordance with all the conditions 
prescribed by the law of the state authorizing the issue. In 
purchasing such bonds care should be taken to see that they 
are vouched for by a competent authority. There may be a 
series of bonds, secured by successive mortgages, or deeds of 
trusts, as for example, first mortgage bonds, which are those 
secured by a first mortgage lien, second, third or fourth mort- 
gage bonds successively secured by second, third or fourth 
mortgages respectively. It is customary for railroads to issue 
different series of bonds secured by mortgages, some of which 
are the first lien, others second lien and others third. Rail- 
roads sometime issue what is called " debenture bonds,' ' which 
are bonds sometimes without any security and sometimes 
secured by the deposit of other securities with a trustee under 
an instrument providing that if the bonds are not paid, or if 
there be a default in payment of interest, the securities pledged 
may be sold by the trustee. 

A bond, therefore, in the common acceptance of the word is 
simply a promise to pay money upon specified conditions and is 
to be construed the sa'me as any other contract. Generally 
when given for the payment of money alone, as by a corpora- 
tion, a bond is simply a more formal promissory note. In 
case of a failure on the part of the principal to pay a bond, if 
there is personal surety, such surety may be called upon to 
pay; or if payment is secured by the pledge of personal prop- 
erty or mortgage of real property, sale can be had in accord- 
ance with the terms of the mortgage or instrument of pledge. 
If a bond is given for the faithful performance of duty, as by a 
public official, or an administrator, or executor, recovery may ' 
be for the amount of the loss sustained because of the breach. 



34 



CHAPTER X. 



COMMON CARRIERS. 

A CARRIER is one who undertakes for a consideration the 
transportation of persons, or moveable property, and 
L two classes are recognized, namely, "private carriers" 
and "common carriers. " A private carrier is one who 

undertakes, without being engaged generally in the business, 
to deliver goods at a particular place for hire. In law he is 
not an insurer, but is liable only for a failure to exercise such 
care and skill as an ordinarily prudent man would exercise in 
his own business. He differs from a common carrier, who is 
one who holds himself out to the public as engaged generally 
in the business of carrying persons or freight for hire and is 
obliged by law to undertake the charge of transportation from 
all persons who desire to employ him; whereas a private carrier 
is only bound to transport property if he is willing to under- 
take the duty. A common carrier is also an insurer, that is, 
if he loses the goods entrusted to him, except by act of God, 
which is only another name for an inevitable casualty, such as 
a tornado or earthquake, he is liable to the owner for the 
value of the goods. This duty is imposed upon the common 
carrier for reasons of public policy and most of the law suits 
involving the question of liability arise from the desire of the 
common carrier to limit his liability by special contract. 

A common carrier is one who undertakes for hire, or reward, 
to transport the goods of anyone who chooses to employ him 
from place to place. He must hold himself out to the public 
as ready to engage in the business of transportation of goods 
for hire. He is not bound to carry goods of any description 
for every person, but only in accordance with his public pro- 
fession. Thus railroad and express companies are common 
carriers and this is so not only in regard to property, but 
also so far as the former are concerned, as to passengers and 
their baggage. 

Common carriers owe to the public the duty of carrying goods 
without discrimination for all who desire to employ them, but 
they may restrict their business to particular classes of property 

! 35 



EVERYDAY LAW 

and they may refuse to receive dangerous articles, such as 
explosives and chemicals liable to ignite. A railroad company 
is bound to furnish suitable cars, as required by customers 
upon reasonable notice whenever it can do so with reasonable 
diligence, without injury to its other business and cannot dis- 
criminate between shippers. It is bound to provide facilities 
for receiving freight, yards for live stock and suitable accom- 
modations for passengers, and it may make pre-pay ment of 
its charges a condition for furnishing transportation. The 
relations between a railroad company and an express company, 
whereby the latter obtains the right to have its goods trans- 
ported, is a matter of special contract. A railroad company is 
not required to transport goods to a point beyond its line, unless 
it holds itself out as ready and willing to undertake the ser- 
vice, and a common carrier is liable for damages for refusal to 
receive property for transportation, which damages include the 
cost of keeping the goods during the delay, the difference 
between the value of the property where it was tendered for 
transportation and its value at the place where it was to be 
delivered less the freight charges, and is also liable for such 
reasonable profits that could have been obtained by the shipper 
in his business, of which he has been deprived by this refusal 
of the carrier. The carrier is also liable if it wrongfully refuses 
to accept property for transportation, for the expenses of pro- 
tecting such property, and such damages for delay which are 
the necessary and usual result of the wrongful act and for the 
deterioration of the property during such delay; and it is also 
liable for the expenses of delivering the property to it a second 
time or for its loss by theft, where the shipper has had no 
reasonable opportunity to dispose of or protect the goods. 

In order to constitute a person or corporation a common 
carrier he, or it, must hold himself, or itself, out to the public 
as engaged in the business of transportation for hire. The 
general rule as to a common carrier's liability with reference to 
goods is that he is liable for all loss, or destruction, or injury 
to goods not occasioned by the act of God, or inevitable 
calamity, or the public enemy. The act of God means some 
casualty not due to human agency, as has been stated, viz: 

36 



COMMON CARRIERS 

an earthquake, tornado or fire occasioned by lightning, or a 
flood of such extraordinary character that it could not have 
been anticipated and guarded against. The common carrier is 
not liable for some injury or destruction to property caused by 
the negligent act of the owner, as where the goods are not 
properly packed. He is liable for negligence in loading or 
unloading, but is not liable if the injury to the goods is due to 
their inherent nature, or defects therein. So where injury 
results to live stock, because of the peculiar nature and pro- 
pensities of the animals, the carrier is excused from liability if 
he has exercised such reasonable care and foresight as ought 
to be reasonably exercised under the circumstances. 

Common carriers are accustomed to give receipts for goods 
received for transportation, which are called "bills of lading," 
in which they often seek to limit their liability, but in most 
cases such limitations are forbidden by statute. A common 
carrier may make reasonable limitations of his liability, such as 
exempting itself from liability from any inevitable cause, or 
loss or damage by fire, or, if engaged in the business of trans- 
portation by water, for loss occasioned by casualties such as 
shipwreck, or storm, but such carrier cannot by contract ex- 
empt himself from liability for loss occasioned by his own negli- 
gence, or the negligence of his employees. There are a great 
many technical questions involved in determining the liability 
of common carriers and it is only possible to state with any 
degree of accuracy the law as to liability in general terms, 
because different states have different laws and the courts 
differ in their opinions. 

In order that the carrier may be charged with liability for 
the custody, care and transportation of goods, they must be 
delivered to him and such delivery must be complete. Often 
when the goods are delivered to an agent of the carrier, care 
must be taken that such agent has the authority, or an appar- 
ent authority, to receive the goods. Bills of lading are receipts 
given for the goods and are generally negotiable. For ex- 
ample, a man ships goods from New York to Chicago, subject 
to his own order; then he endorses the bill of lading over to 

37 



EVERYDAY LAW 

the person to whom the goods were sold and attaches it to a 
draft on the person to whom the goods are sold for their price, 
which draft is deposited in bank for collection. In such case 
the goods can only be obtained by the purchaser by production 
of the bill of lading after payment of the draft. Or goods may 
be shipped direct to the purchaser on what is called a free 
bill of lading. This bill of lading is for many purposes the 
representative of the goods shipped, and the title to the goods 
while they are in the possession of the carrier may be trans- 
ferred by the owner by assignment of the bill of lading so that 
in this sense a bill of lading is a negotiable instrument, but 
not in the same way as promissory notes or bills of exchange, 
which stand for money and which pass by delivery; the trans- 
feree of a bill of lading has no higher title to the goods men- 
tioned in it than the person by whom the transfer is made. 
In many states statutes declare bills of lading to be negotiable, 
but this amounts only to saying that such bills of lading can 
be transferred and operate as a transfer of the title to the 
goods. If a bill of lading is fictitious the person to whom it is 
delivered acquires no rights because it represents nothing, but ■ 
if the carrier is negligent in issuing the bill of lading he may 
be liable. The statutes of most states provide that no bill 
of lading shall be issued unless the goods named therein have 
been actually received by the carrier. 

There is a legal right, the technical name of which is " stop- 
page in transitu," that is the right of the person who sells 
goods on credit which have been delivered to the carrier for 
transportation to such purchaser, in case the purchaser be- 
comes insolvent before the carrier has delivered the goods to 
him, to prevent delivery by giving notice to the carrier and 
retaking possession. This is a technical branch of the law of 
sales and ought not to be discussed in this place. 

By joint arrangement between different railroads, or other 
common carriers, what is called a "through bill of lading" may 
be given, that is a bill of lading covering carriage by two or 
more connecting lines or carriers. 

A common carrier has a lien on the goods transported for his 

38 






COMMON CARRIERS 

charges of transportation, but the lien only attaches to the 
goods involved in the transaction and does not extend to other 
goods than those for the carriage of which charge is made, 
but such lien may include the charges necessarily incurred by 
the carrier, as for storage, or for charges advanced to other 
connecting carriers. The carrier has no lien as against the 
true owner of the goods who has never expressly, or by impli- 
cation authorized, such delivery to the carrier. This lien gives 
the right of possession but not a right to sell unless such right 
is conferred by the statutes of the state. 

•Public carriers of passengers, such as railroads, steamboat 
and stage lines, are engaged in a public business which imposes 
upon them the duty to serve everybody without discrimination; 
they can make reasonable rules for the regulation of the con- 
duct of passengers, but they cannot discriminate, such as to sell 
tickets to some and refuse to sell them to others. The relation 
of passenger and carrier commences when the former places 
himself in a situation to avail himself of the transportation 
facilities; thus a railroad is liable to a passenger when he 
enters the train with his ticket and sometimes when he enters 
the station provided for the accommodation of passengers. One 
who fraudulently attempts to secure transportation, as for 
example by presenting a non-transferrable ticket, is not a pas- 
senger, nor can a person become a passenger by attempting to 
board, or by presenting a ticket on, a train not provided for 
the accommodation of passengers, as a freight train. Where 
the relation of carrier and passenger is once established, it con- 
tinues until it is ended by the voluntary act of the passenger 
and continues until the arrival of the passenger at his destina- 
tion, and the temporary departure of a passenger, as for ex- 
ample alighting from the train to enter a telegraph office, or 
a meal station, does not terminate the relation. Persons having 
the privileges of trains for selling goods, or postal clerks in the 
United States service, are passengers. The liability of the com- 
mon carrier for injuries to passengers is different from that to 
its employees. The carrier is liable to one holding free trans- 
portation for the same care and protection which is it obli- 
gated to furnish to persons paying their passage, and the com- 

39 



EVERYDAY LAW 

mon carrier can make reasonable rules and regulations for the 
conduct of the passengers, but must give notice of them in 
some way so that the passenger can have knowledge of such 
regulations. If a carrier has a rule, for example, requiring 
passengers to purchase tickets before entering the train, such 
rule is valid and it may impose an extra fare for failure to 
purchase tickets. A common carrier has the right to exclude 
from its train persons who cause annoyance to other passengers, 
as for example, those who are intoxicated or are guilty of 
riotous conduct or use vulgar, indecent and profane language. 
It has a right to put a person off the train who refuses to pay 
his fare, but a passenger is entitled to a reasonable time in 
which to present his ticket or pay his fare. If an agent selling 
a ticket makes a mistake, which the passenger could easily 
see on examining the ticket, and such ticket does not cover 
the transportation he cannot complain if he is put off the train. 

A common carrier is liable for a wrongful expulsion of a pas- 
senger or person from its train and also liable for the wrongful 
acts of its servants done in connection with their employment. 
It is liable if it expels a passenger, or any person, at a danger- 
ous time or place; or if it expels him in an improper manner, 
but it may use sufficient force to effect the removal of the per- 
son from the train if it does so in a manner reasonable under 
all the circumstances of the case. 

The carrier can limit the time within which a ticket must be 
used, but such limitation must be reasonable. Usually unused 
tickets are redeemable. Where a ticket is sold on a particular 
train for a specific destination, the carrier must stop the train 
at the place designated and give the passenger reasonable 
opportunity to alight. The conductor is not bound to stop the 
train to let off a passenger at a place where the train is not 
scheduled to stop. He must, however, stop the train at the 
usual platform and give the passengers a reasonable opportunity 
to alight from the train. 'There is no contract on the part of 
the carrier that a particular train will arrive at its destination 
at a certain time. The carrier will not be liable for delays in 
a journey that are not occasioned by some unusual act or 

40 



COMMON CARRIERS 

by negligence which it could have prevented by proper care. 

Street-car companies are liable for negligence and the same 
rules apply to the carriage of passengers on street-cars as by 
railroad or steamboat, having regard for the particular differ- 
ences in methods of operation. 

So a public elevator in an office building is a common carrier 
and the owner of such building is liable for its negligent 
operation. 

All common carriers are bound to render proper protection to 
their passengers against annoyance from fellow passengers and 
protect them from injury by strangers. They are liable for inju- 
ries to passengers by accident, but are not liable if the accident 
is due to causes which could not be guarded against by proper 
care, or are inevitable and which could not have been avoided 
by the exercise of a high degree of care. A passenger on a 
railroad is entitled to protection against danger in the waiting 
room and on the platform and in getting on and off a train. 
Common carriers are obliged to provide reasonable accommo- 
dations for passengers and are bound to employ competent per- 
sons as employees or servants. 

If an accident is caused to a passenger because of his own 
negligence, the carrier is not liable. 

A carrier is liable for loss of the baggage of its passengers, 
but the authorities do not always agree as to what constitues 
baggage. The general term * 'baggage,' y or "luggage," includes 
such articles of necessity and comfort as are usually carried 
by passengers for their personal use and protection, having 
regard to the circumstances, business and condition in life of 
the passenger and the nature and extent of the contemplated 
journey. 



41 



CHAPTER XI. 



CONTRACTS. 

A CONTRACT is an agreement between two or more persons, 
L\ for a consideration to do or not to do some specific 

JL JL thing. It will be seen, therefore, how broad this 
subject is, because it covers agreements of every kind, 
nature and description, whereby parties contract with each 
other to do, or not to do, something. 

A contract in order to be binding must be made by persons 
competent to enter into it. In law male persons under the age 
of twenty-one, and females under the age of eighteen are termed 
infants, or minors, although in some states all persons under 
twenty-one are infants. An infant is not competent in law to 
make many kinds of contracts. He can contract, however, for 
necessaries. He or she can, after a certain age, make a con- 
tract of marriage. The subject of minors, or infants, is treated 
of in another place. The contracts of an infant may be good, 
or voidable at his election, or absolutely void. 

At common law husband and wife were considered one per- 
son, and the husband was the person, so that a wife was not 
competent to make contracts in her own right and that is still 
the law in some states, although it is believed that at the 
present time in practically all the states married women are 
relieved of all disabilities as to powers of contract and may 
act as if unmarried except perhaps in certain instances, as for 
example in making a contract of suretyship. 

Insane persons are also incapable of making a contract. A 
person may be afflicted with degrees of insanity; he may be an 
idiot, or simply suffering from hallucinations, or be partially 
insane, or be weakminded from the infirmities of age or disease. 
A person though insane at times has the power of making a 
contract in lucid intervals if he has such. An insane person is 
liable for necessaries furnished for his support. To invalidate 
the contract of an insane person, the insanity must so far 
impair the understanding as to preclude a free and intelligent 
consent to the terms of the agreement. 

A drunken person in some respects is on the footing of an 

42 



CONTRACTS 

insane person, for example if the drunkenness is to such an 
extent as to impair his understanding of the business in which 
he is engaged. 

The government of the United States, or of a state, can con- 
tract the same as an individual, but such contracts must nec- 
essarily be made through agents and the acts must be within 
the authority of the officer making them. Foreign govern- 
ments can also make contracts. 

Corporations can enter into contracts through their proper 
officers and the powers of a corporation in the matters of con- 
tract will be treated of under that heading. 

All individuals, or corporations, can contract through agents 
and that subject has been heretofore discussed under the head 
of agency. 

Contracts are divided into two classes, those which ate "ex- 
press," that is specifically entered into between two or more 
persons, and * 'implied,' * as where the law will imply a promise, 
as for example, if a man orders goods to be sent to his resi- 
dence, or place of business, and no price is agreed upon, the 
law implies a contract on his part to pay the market or reason- 
able price for them. So, if a person accepts the services of 
another there is an implied contract on his part to pay the 
reasonable value of such services. 

It is necessary in order that a contract may be binding that 
there be a consideration for the promise or undertaking. 

In law different kinds of considerations are recognized. A 
good consideration is such as that of blood, or natural love and 
affection, as where a parent, in consideration of love and affec- 
tion, deeds property to a child. A valuable consideration is 
such as money, marriage, or the like, esteemed in law an 
equivalent for the grant and is founded on motives of justice. 
A consideration may be either money or something beneficial 
to one party or disadvantageous to the other, or if there are 
two parties to the contract and one agrees to do something if 
the other will do something, these mutual promises are equal 
to a consideration each for the other and answer the require- 
ments of the law. A consideration immoral, illegal, or contrary 

• 43 



EVERYDAY LAW 

to public policy, will not support a contract. Agreements to do 
something in violation of law are void, and if the consideration 
is an immoral act, as for example, to pay a certain sum in con- 
sideration of not being prosecuted for embezzlement, such a 
consideration is illegal. 

i It is necessary for a valid express contract, as distinguished 
from an implied contract, that there must be a mutual consent 
or meeting of the minds of the parties, that is each party must 
have an intention of consenting to the contract. Of course 
where a contract is in writing and signed by the parties, there 
can be no question as to consent, but if the contracts are 
verbal there must be in that case an intention on each side of 
being bound by the agreement and such intention must be 
understood by both of the parties. A contract is based upon 
an offer to do something and the acceptance of that offer and 
there must be a certainty in the offer and in the acceptance. 
For example, a proposal is made by letter. This is only an 
offer or proposal, and if the party to whom the letter is ad- 
dressed by reply to such letter expresses an intention to accept 
the offer made, the two letters constitute a contract. If a 
person says to another, I will sell you this horse for $100, and 
the other party says I accept your offer, that is a contract, 
although if the price is not then paid something must be paid 
to bind the bargain or the contract must be in writing. Con- 
tracts must be certain in their terms, although any agreement is 
certain if the intent of the parties can be ascertained. An 
offer to sell goods need not specify the price, for if no price is 
stated it is presumed that the market, or reasonable, price is 
intended. An acceptance of an offer may be often inferred 
from the silence of a party, as if one person sends goods to 
another without being asked to do so; if the persons to whom the 
goods are sent uses them or deals with them as his own, he 
will be deemed to have accepted them and to have promised 
to pay their reasonable value to the person from whom they 
were received. A person receiving goods under those circum- 
stances is not bound to return them. To bind himself he must 
indicate by some act an intent to retain them. When an offer 
is made it must be accepted within a reasonable time, or within 

44 



CONTRACTS 

the time specified in the offer, and what is a reasonable time 
always depends upon the circumstances of each case, as for 
example, an offer to sell land necessarily implies that the per- 
son to whom the offer is made shall have a reasonable time 
for investigation. The death or insanity of either party before 
acceptance of an offer is made, terminates the negotiations and 
is a revocation of the offer. An offer may be accepted by 
telegraph. 

In past times there was a distinction made between contracts 
under seal and contracts to which signatures were affixed with- 
out a seal, but in modern times it is only necessary for a con- 
tract to be in writing and signed by the parties and private 
seals have in most states been abolished. 

A person is not bound by an agreement unless he has agreed 
to it without being influenced by fraud, violence or improper 
means. It is the duty, however, of every contracting party to 
know the contents of a writing before he signs it. The law does 
not permit one to avoid a contract into which he has entered 
on the ground that he did not understand its terms. If a per- 
son cannot read, it is his duty to get someone to read the 
paper for him. On the other hand if a party induces the other 
to sign the paper without reading it, relying upon his state- 
ment of the contents, if such statement was fraudulent the 
contract can be avoided. If some trick is used as the sub- 
stitution of another document for the one which a party thought 
he was signing, such act is fraudulent and will avoid the con- 
tract. Where both parties are mutually mistaken, so that their 
minds did not meet, court will often reform the contract so as 
to make it express the intent of the parties. Mistake of law 
will not affect the validity of a contract, but only mistakes of 
fact. Any fraud practiced by one party to a contract on the 
other will avoid it and any false representation of a material 
fact made with the intention that it shall be acted upon by the 
other party in entering into the contract, and is in fact so 
acted upon, constitues fraud. If the parties stand in a trust 
relation to each other, as a guardian to a ward, or as trustee 
to his beneficiary in order to make a contract between them 

45 



EVERYDAY LAW 

valid it must be entirely fair and is always open to inquiry. 
A mere representation of opinion, although mistaken, is not in 
law a fraud, nor is a representation of intention or expectation 
as to some future act, nor is a mistaken statement of the 
law fraudulent, because both parties are presumed to know the 
law. In order that a false representation may amount to fraud, 
it must be made with knowledge of its falsity. If people take 
upon themselves to make assertions as to things of which they 
are ignorant whether they are true or untrue they are held 
responsible to the same extent as if they had asserted what 
they knew to be untrue. 

The law presumes that persons will naturally exaggerate the 
value of what they have to sell, or exaggerate the value of 
services, and if such statements are not such as reasonable 
men are in the habit of relying upon in determining whether 
to enter into a contract, they do not consitute fraud; and so 
where a person can easily satisy himself as to whether the 
representations are true or false, he cannot, if he neglects the 
opportunity of informing himself, afterwards claim that he has 
been deceived. A person who has been induced by fraud to 
enter into a contract, may upon discovering the fraud rescind, 
or declare that he will not be bound by the contract, and 
repudiate it, but he must restore or offer to restore, the con- 
sideration which he has received from the other party under 
the contract. So if a person has been induced by fraud to 
buy goods he may on discovery of the fraud return the goods, 
but if he does not return them he must pay the price, or at 
least their value. The party deceived, however, is not 
required to return a thing which is absolutely worthless, as a 
forged note. 

If a party has been forced by threats of personal violence to 
enter into a contract, he may repudiate it, but a contract made 
under "duress," as it is called, or by threats of violence, is 
not absolutely void, but the party forced to enter into it may 
afterwards affirm it as by acting upon it. 

The courts will set aside a contract into which one party has 
been induced to enter into, by what is called "undue infLu- 

46 



CONTRACTS 

ence" of the other. What is called undue influence consists 
of acts which, though not fraudulent, amount to an abuse of 
the power which circumstances have given to the will of one 
individual over that of another, as where a person by ingrati- 
ating acts obtains such influence over a person of weak or 
susceptible mind, that the party influenced cannot refuse to 
do anything that the other requests. Solicitation, importunity, 
persuasion and argument are not undue influence, but on the 
other hand influence attained by superiority of will or mind 
or character, or by flattery, which gives a person power over 
the will of another so as to destroy his ability to refuse to do 
anything requested of him is undue influence. Sometimes the 
law presumes undue influence as where there is a confidential 
relation, as for example, that of parent and child, attorney 
and client, or where there is some trust relation, as trustee 
and beneficiary, or when there is mental weakness on the one 
side. The relations of physician and patient and persons 
engaged to be married, are trust relations. If a person deals 
with another who can neither read nor write, or who is men- 
tally weak, he must use the utmost good faith and not take ad- 
vantage of the other's condition. Sometimes inadequacy of 
consideration is ground for releasing a person from the obliga- 
tion of a contract. 

The courts will never enforce an illegal agreement. Such 
agreements may be either in violation of positive law or con- 
trary to public policy. In the former class fall agreements 
involving the commission of crime, or dealings with foreign 
enemies, or whose object is the commission of some wrong 
against a third person, as to perpetrate a fraud, or infringe 
upon another's patent or trade-mark, or copyright, or to pub- 
lish a libel. Agreements for the fraudulent raising or lowering 
of bids at auction sales, or for fraud on creditors, are illegal. 
Of course, if a statute declares certain contracts void, any 
agreement in violation of the statute is of no effect, but if the 
statute merely imposes a penalty on the doing of an act, some 
courts hold that an agreement for the doing of such act penal- 
ized is valid, others hold to the contrary. Sometimes wher 3 
a license is required by statute for the engaging in a particular 

47 



EVERYDAY LAW 

profession, or occupation, a contract made without such license 
is illegal and void, as for example, an unlicensed physician in 
some states cannot recover for his services. 

Public policy forbids any contract, the object of which is to 
do some act which is injurious to the public or against the 
public good, as for example, gambling contracts, contracts for 
immoral relations, contracts for the dealing in any article the 
sale of which is prohibited by law, as intoxicating liquor, 
opium, morphine, or injurious drugs. Contracts for the inter- 
ference with the administration of government or justice, are 
against public policy and void. A salaried public official 
cannot agree if elected to an office to serve for less than the 
salary fixed by law. Contracts having for their object the 
interference with the integrity of elections, or with the courts 
of justice, as for example, to induce a witness to swear falsely 
or to abscond, are void. So an agreement involving the com- 
promise of a crime is void. So is generally an agreement not 
to prosecute one guilty of a crime. 

Agreements whose object is to oust the jurisdiction of the 
courts are against public policy, as for example, an agreement 

not to sue except in a certain court or at a certain place, or a 
by-law of a benefit society that the decisions of its officers on 
a claim shall be final and preclude resort to the courts. Agree- 
ments against good morals are illegal; so are those in restraint 
of marriage, as for example, where a man agreed to pay a 
woman a certain sum of money if he married any other person 
but her, or a contract by a person that he will not marry 
within a certain number of years. Contracts by which one 
person agrees to give another compensation if he will negotiate 
a marriage are against public policy, and so is a contract, the 
object of which is to divorce a man and woman, or agreements 
for the separation of husband and wife. 

Any agreement which operates as an unreasonable restraint 
of trade is illegal and void. If a man on retiring from a firm 
agrees not to engage in the same business in the same town 
within a specified number of years, such an agreement is reason- 
able and will be enforced, but if he agrees never to engage 

48 



CONTRACTS 

anywhere in the same business such a contract is unreasonable 
and void. 

Sometimes an agreement may be against public policy because 
it affects the duty which one person owes to another, so a parent 
cannot make any agreement in regard to his child contrary to 
the child's interests, nor can a party exempt himself by con- 
tract from liability for his own negligence. 

No court will aid either party to an illegal agreement, but 
leaves them in the same condition in which it found them. A 
party to an illegal agreement can set up its illegality as a 
defense even though it amounts to an assertion of his own 
turpitude. 

The rights of parties to illegal contracts vary under different 
circumstances and in different jurisdictions, and legal advice 
concerning their effect should always be taken. 

In construing contracts it is always necessary to seek the 
intent of the parties. Plain, unambiguous language in a con- 
tract will be given effect accordingly but where the language 
is uncertain the court will seek to discover the intent of the 
parties and enforce the contract according to such intent, but 
a contract may be so vague and uncertain in its terms that the 
courts will not attempt to enforce it. If one writing refers to 
another, they will be read together, and a contract will be 
construed so as to include not only what is actually written 
in the contract, but the things which the law implies as a part 
of it, such as the necessary and usual means to carry the agree- 
ment into effect. The courts will always seek to uphold the 
validity of a contract, rather than to hold it illegal, unless it 
is clearly contrary to law. 

A contract may be discharged by agreement to that effect, 
or by performance, or by impossibility of performance, or by 
operation of law, or by violation of its terms by the opposite 
party. If the contract does not specify a time for performance 
the law implies that it is to be performed within a reasonable 
time and what is a reasonable time depends upon the circum- 
stances of each particular case. If one party to a contract, 
either before the time for performance or in the course of the 

49 



EVERYDAY LAW 

performance, makes such performance or continued perform- 
ance impossible, the other party is discharged from its 
obligation. 

Contracts may be joint or several, or both joint and several; 

that is two persons may agree with another, so that each, or 
both, may be held liable at the option of the opposite party. 
Where two or more persons make a joint promise, each is liable 
and if one dies the performance is thrown upon the survivor. 

The validity of a contract is generally determined by the place 
where it is made and if it is valid where made it is valid every- 
where, but if it is made to be performed in another place, the 
law of the place where the contract is to be performed will 
determine its validity. The capacity of the parties to make a 
contract is determined by the law of the place where the con- 
tract is entered into, and its form is determined by the same 
rule. However, although a contract may be valid where 
made, it will not be enforced in another state where it is con- 
trary to good morals or where the citizens of the foreign state 
would be injured by its enforcement, or where a contract vio- 
lates the positive legislation or public policy of the state 
where enforcement is sought. 

The validity of contracts relating to land is determined by the 
law of the place where the land is situated. 

A party violating a contract is liable to the other party for all 
damages occasioned by his refusal. 

Certain contracts are required by law to be in writing, by 
what is called the " statute of frauds.' ' In 1676 the Parliament 
of England enacted a law which has probably in its main 
features been enacted in every state of the Union. This law 
provides that no executor or administrator shall be held upon 
a promise to pay a debt of the deceased out of his own estate; 
or to answer for the debt, default or miscarriage of another 
person; or to charge any person upon an agreement made in 
consideration of marriage; or any contract for the sale of 
lands or any interest in them; or upon an agreement that is 
not to be performed within one year, unless the agreement or 
some memorandum, or note thereof, shall be in writing and 

50 



CONTRACTS 

signed by the person to be charged therewith, or some other 
person by him thereto lawfully authorized. This law does not, 
however, prevent a person fulfilling a verbal agreement, which 
under the law ought to be in writing, if he so desires, but the 
obligation cannot be enforced by legal proceedings. If one 
party to an oral contract has paid the consideration and the 
other refuses to perform his part of it because it is not in writ- 
ing as required by law, the money paid may be recovered 
back. This law does not abolish anything in the common law 
of contracts, but merely provides that a contract which the 
law requires to be in. writing cannot be enforced in court unless 
it is in writing. 

Nice distinctions have been drawn as to what is an interest 
in lands, and what is a sufficient memorandum in writing to 
answer the requirements of the statute, and it is impossible 
to state any general rule. Sometimes where, under a verbal 
agreement, there has been a part performance, the contract 
will be enforced, but in all cases if a party desires to enforce 
any such agreement he should take legal advice. 

Rules for Writing Contracts: 

The general form for beginning a written contract is to give 

the names and residence of the parties, for example, "Memo- 
randum of an agreement made and entered into this 10th day 
of June, 1913, between John Smith, of the City of Detroit, 
Michigan, and John Doe, of the same place, witnesseth as 
follows:" 

The next thing to do is to tell in plain language just what 
John Smith agrees to do and what John Doe agrees to do, remem- 
bering the rule of law that a written contract is supposed to 
contain the entire agreement of the parties and afterwards neither 
party will be allowed to contend that something different was 
meant, or that there w T as some part of the agreement which 
was not inserted in the written contract. A written contract 
cannot be varied by oral evidence, although if technical terms 
are used, or the language is ambiguous, evidence will be heard 
as to the meaning of the terms, for example, if No. 1 white 

51 



EVERYDAY LAW 

fish is sold, either party may give evidence to explain what 
is meant by No. 1 white fish. 

After the writing tells just what is to be done by each party, 
it is usual to close it in the following manner, "In testimony of 
which the parties have hereunto set their hands on the day 
and year first above written." 



52 



CHAPTER XII. 



CORPORATIONS. 

A CORPORATION is a creation of the law whereby a 
number of individuals may associate together under 
what is called a * 'charter,' * or permission granted 
by the state to act under that name and continue to 
act for a specified number of years, or for an indefinite period, 
and although the individuals may die, or part with their interest, 
this artificial being continues to exist as a distinct entity. Be- 
cause many corporations have no limit to their existence they 
are said to be immortal. 

Corporations have been divided into ' 'public* ' and "private". 

Private corporations are associations formed by the voluntary 
agreement of their members, under authority of general statutes 
or legislative grant, while public corporations are government 
institutions created by law for the administration of the public 
affairs of the community, such as states, counties, cities and 
school districts. 

On the other hand private corporations may partake of a public 
nature, of which railroad, telegraph and telephone companies 
and banks and insurance companies are examples. These cor- 
porations are formed to serve the public and the community has 
an interest in seeing that their affairs are properly adminis- 
tered, so the states generally exercise control, or superintendence, 
over their affairs and their business is regulated in many re- 
spects by positive law, which often restricts their operations 
and regulates the prices they may charge for their services 
and to insure their solvency their affairs are examined fre- 
quently by designated officials. Insurance companies are ex- 
amples in point. 

It is usual at the present time, because of the convenience 
and advantages of conducting a business as a corporation, for 
men to incorporate for the transaction of any and all kinds of 
business, and associations of this kind are quite common. 

A private corporation is an association of individuals, acting 
under a name selected by them, which has power by law to 
transact business under that name for a specified number of 



EVERYDAY LAW 

years; except in the case of charitable corporations, which are 
not organized for profit and have no capital stock, the interest 
of each member is evidenced by certificates of the extent of 
such interest, which are called "stock certificates," or certifi- 
cates of stock. These pass by transfer or assignment and 
the death of the holder of shares of stock does not affect the 
continuance of the corporation, the interest of the owner of 
the stock passing by assignment or operation of law to another 
owner. 

Corporations are either business, or charitable and benevolent. 
The business of the former is carried on for the profit of the 
shareholders, or owners; the latter are not organized for profit 

but for the purpose of maintaining some institution like a 
school, or hospital, and from which the incorporators derive 
no profit. We shall consider only private business corporations, 
including, however, those that are formed for the conduct of 
business public in its nature. 

A corporation differs from a partnership in that each partner 
is liable for the debts of the firm, but after a man has paid the 
par value for his stock in a corporation he is not liable for the 
debts of the corporation, except where the law otherwise ex- 
pressly provides; for example shareholders in a national bank 
are liable for an amount equal to the par value of the stock, 
in addition to such par value, and in some states this double 
liability extends to other kinds of corporations. 

The authority conveyed to an association to act as a corporation 
is called its "charter" and this authority may be given by 
special act of Congress or the Legislature, or, which is more 
usual, the association is incorporated under the general laws 

of the state providing for the organization of all kinds of cor- 
porations and when the requirements of the statutes are com- 
plied with and the documents required by law are filed with 
the Secretary of State, he issues a certificate of incorporation. 
The laws of the State under which a corporation is formed and 
its articles of Association form its charter and, as a general 
thing, a corporation only has the power to conduct the busi- 
ness specified in its articles of association, or charter, and 

54 



CORPORATIONS 

acts in excess of that authority are called "ultra vires,' ' which 
in many cases are void and cannot be enforced, although if 
his part has been performed on the part of one dealing with 
the corporation, the latter will not under some circumstances 
be allowed to shield itself under the claim that it had no 
authority to make the contract. 

The constitutions of the various states often forbid the 
granting by a legislature of a special charter, but require all 
corporations to be organized under general statutes and also 
limit the powers of corporations as well as the authority of 
the legislature. Any number of persons have the right to incor- 
porate under the general laws of the state if they comply with 
the requirements of the law. The affairs of a charitable corpo- 
ration are generally administered by trustees, who in most 
cases when a vacancy occurs from death or resignation, can 
elect a new trustee to fill the vacancy. The affairs of business 
corporations are administered by certain agents elected by the 
shareholders called "directors, " and when these directors meet 
together it is called a "meeting of the board." The capital of 
a corporation is called "capital stock," and is divided into 
shares and the owners of these shares are called "shareholders" 
or "stockholders." The contract under which they act is 
found in the articles of association and charter. A corporation 
is a trustee for its stockholders and it is the duty of the direc- 
tors to exercise due care and diligence in discharging this 
trust, and the directors are liable in damages for failure to 
perform their duty. A corporation is liable for transferring 
shares of stock without authority, or for wrongfully issuing 
stock. The officers of a corporation are agents who must act 
within the authority conferred upon them by the charter, or 
the by-laws, or resolution adopted by the directors. 

The stockholders of corporations are required to meet as pro- 
vided in their articles of association, generally once a year, for 
the purpose of electing a board of directors. This meeting 
must be held within the limits of the state creating the corpo- 
ration and at the place prescribed by the by-laws or articles 
of association, and if notice is required of such meeting, this 

55 



. EVERYDAY LAW 

notice must be given. If a special meeting of the stockholders 
is called, as provided for in its charter, or by-laws, a notice 
must be given to each stockholder stating the object and 
purpose of the meeting and no business should be transacted 
at the meeting except such as is stated in the notice. Usually 
a majority of the board of directors constitute a quorum. 

Each shareholder is entitled to one vote for each share of 
stock held by him and in most states what is called the "cumu- 
lative" plan of voting prevails, that is if a stockholder holds ten 
shares and ten directors are to be elected, he can vote his 
ten shares for the ten directors, giving ten votes to each, or 
he can cast one hundred votes for one director. This plan was 
probably devised to enable minority stockholders to obtain a 
representation in the board of directors. So if ten directors 
are to be elected, the minority stockholders by combining may 
elect two or more directors and thus have a proportionate 
representation in the board of directors. 

Corporations have the power, and it is their duty, to adopt 
by-laws which are simply rules for the conduct of their busi- 
ness and which generally define the duties of the officers and 
provide for meetings of the directors, or stockholders, transfer 
of shares and such other things as are deemed necessary. A 
by-law differs from a resolution. Every member of a corpora- 
tion is conclusively presumed to know its by-laws, but out- 
siders are not presumed to have knowledge of the by-laws. 
A by-law to be valid must not be contrary to the charter, nor 
enlarge its powers, nor be contrary to the articles of incorpo- 
ration, nor the statutes of the state, or the constitution of the 
state or the United States; must operate equally on the mem- 
bers, must not be inherently unjust, must not operate retro- 
spectively, nor be unreasonable or oppressive. A by-law can- 
not be enacted, the effect of which is to do something against 
the policy of the law that an individual could not do, that is, 
the act cannot be in restraint of trade, nor can it prohibit a 
stockholder from transferring his stock, nor release him from 
the obligation of paying for his stock. 

The amount of the capital stock of a corporation is fixed by 

56 



CORPORATIONS 

its articles of association or charter, and this stock cannot be 
increased or diminished without complying with the formalities 
required by law. The statutes of the state generally provide 
that stock can be increased or diminished. Stock must always 
be paid for, either in property or money, and no corporation has 
the right to issue stock without receiving full payment there- 
for, and if stock is sold by the corporation for less than its 
par value, the purchaser is liable for the payment of the 
balance. 

When it is proposed to organize a corporation, the persons 
agreeing to take stock are called "subscribers" and they are 
bound to pay for the stock subscribed for by them. 

The assets of a corporation constitute a trust fund for its cred- 
itors and hence the law does not permit the organization of 
corporations unless the stock is fully paid for. The directors 
have no power to fix the price of shares and if property is given 
for stock its reasonable value must be equal to the face or 
par value of the stock. As a rule also a corporation cannot 
take a note from the subscriber for the amount of his stock. 
Sometimes under the laws of the state the stock must be all 
subscribed and paid for in money, while in other states only a 
certain proportion of the stock need be paid up at the begin- 
ning and the balance can be paid for as required by the cor- 
poration. After the stock is once paid up, unless the stock- 
holders unanimously consent, no further payments can be re- 
quired of the stockholders, but, in accordance with the law, 
the capital stock can be increased in order to provide the 
necessary funds for carrying on the business. Where stock is 
not fully paid for, but only in part and the balance is* to be 
paid for as calls or assessments are made, the stock may be 
forfeited for non-payment of the balance due, or of the assess- 
ment or call when made, but this power to forfeit must be con- 
ferred by statute of the state where the corporation is organ- 
ized, or by some provision in the articles of association to 
which the stockholder has consented, and the power can only 
be exercised for the benefit of the corporation and must be 
carried into effect by compliance with all the forms of law 

57 



EVERYDAY LAW 

required, as by notice or other procedure, and the call must 
be regularly made. A valid forfeiture releases the liability of 
the stockholder as to creditors, and if the stock is sold for 
more than enough to pay the balance due, the excess must be 
returned to the stockholder. If shares of stock are forfeited 
they may be resold. 

The certificates of stock issued by a corporation are not prop- 
erty in themselves, but only evidence that the holder is enti- 
tled to so many shares of the stock as shown by the books of 
the company. Transfer of stock is made by making the proper 
record on the books of the company, when the certificate with 
proper assignment and authority for making the transfer en- 
dorsed on the back of the certificate is surrendered, it is then 
cancelled and a new certificate issued to the new owner of the 
stock. The books of the corporation kept for the purpose of 
registering transfers of stock are called the * f transfer books," 
and on the back of a certificate of stock is usually a blank 
form for executing an assignment and direction to the company 
to make the proper transfer by the act of the person designated 
for the purpose. Sometimes this transfer of a certificate of 
stock is executed in blank, that is without naming any person 
as assignee, and the certificate passes by delivery, and in 
such case the books of the company may show that a person 
is owner of the stock when in fact it has been sold and is held 
by another person. Complications of law may result from 
this failure on the part of the purchaser of the " stock to see 
that it is properly transferred, as stock in a corporation may 
be seized on execution by a creditor of the former owner. 

There may be two kinds of stock in a corporation, "pref erred" 
and "common." Preferred stock is merely a pledge to a 
specified extent of any profits the corporation may earn in 
favor of certain shares in preference to the others. In other 
words, if a corporation has one-half of its stock issued as 
preferred and one-half as common, the preferred stock generally 
provides that out of the profits of the company a certain annual 
percentage, or dividend, say seven per cent shall first be paid 
to the holders of the preferred stock and the remainder of the 

58 



CORPORATIONS 

profits, or such portion as may be determined by the direc- 
tors, be paid in dividends to the holders of the common stock. 
Sometimes the preferred stock provides that the dividends 
shall be a guaranteed percentage cumulative, that is if the 
stock is to receive seven per cent annual dividend and some one 
year the corporation does not earn enough to pay the dividend, 
the agreed dividend becomes an indebtedness of the corpora- 
tion, which is to be paid later in addition to the dividends 
for subsequent years. Preferred stock may provide that in 
case of dissolution of the company, when its assets are dis- 
tributed, the preferred stock shall be paid in full before the 
holders of the common stock are paid. It may be possible for 
the common stock to receive a larger dividend than the pre- 
ferred stock, because, after the agreed dividend on the pre- 
ferred stock is paid, there may be sufficient left to pay a larger 
dividend on the common stock. No corporation has power to 
issue preferred stock unless it is given by law, or by the unani- 
mous consent of all the stockholders. 

Sometimes both preferred and common stock is registered by 
a transfer agent, as for example, in order to prevent an over 
issue of the capital stock of a corporation it is provided that a 
certificate of stock, to be valid must be countersigned and 
registered by a trust company known as a "transfer agent," 
and if the preferred stock is registered in this way the divi- 
dends are paid by the transfer agent or company by check to 
the order of the registered holder. 

It is a question whether a guarantee of a dividend by a cor- 
poration on its preferred stock is equivalent to an agreement 
to pay annual interest on the shares at a specified amount, and 
hence becomes a debt, or whether it is simply equivalent to 
an agreement to pay the specified dividend on the stock before 
any profits are divided among the holders of the common 
stock. The answer to this question depends upon the pro- 
visions in the charter or articles of association in regard to 
these dividends. 

The profits made by a corporation are generally divided among 
the stockholders in the shape of " dividends. " Sometimes all of 

59 



EVERYDAY LAW 

the profits of any one year are not divided up in dividends, 
but a portion is reserved for emergency called "surplus". 
Nice questions arise in regard to rights of the holders of stock 
when the stock is held by a person for life only; such a person 
ought to be entitled to his proportionate share of the net 
earnings of the company and if say one-half the earnings are 
reserved for a surplus during a term of years so that the stock 
becomes intrinsically perhaps twice as valuable, the person 
who takes the stock after the life tenant is dead would not 
only get the stock but part of the earnings to which the life 
tenant was entitled. Such questions are purely legal and no 
general statement can be made in regard to the right of such 
holders of the stock. 

The affairs of a corporation are managed by a board of direc- 
tors, selected by the stockholders at the annual meeting of the 
corporation. Sometimes when a corporation is organized it is 
agreed who shall be the directors for the first year. The 
general rule is that the board of directors represent the cor- 
poration and have general power to manage its affairs under 
the by-laws. If the charter limits their powers they cannot 
enlarge them by the enactment of by-laws. Directors cannot 
make or amend the by-laws of a corporation unless authorized 
by statute; they cannot agree to the act of an officer in con- 
verting funds of the corporation to his own use; they cannot 
make promissory notes for the accommodation of outsiders; 
they cannot delegate all their powers of management to an 
executive committee; they cannot sell the corporate assets and 
business and put an end to its business unless authorized by 
the stockholders, but they may transfer the property of the 
corporation in the ordinary course of business and may pledge, 
mortgage and convey the property of the corporation to secure 
debts and generally may make an assignment of all the assets 
of the corporation for the benefit of its creditors; they may 
borrow money for ordinary corporate purposes and employ 
suitable agents and pay them proper compensation. 

Ordinarily the directors of a corporation must be stockholders 
and are presumed to serve without salary. Still a corporation 

60 



CORPORATIONS 

may pay the directors compensation for special services, or 
even for acting as directors, if the power is given by a meeting 
of the stockholders; they must always act in good faith. Ordi- 
narily a majority of the directors constitute a quorum. The 
directors must act as a body at a meeting and cannot act as indi- 
viduals. While a stockholders' meeting must be held in the 
state where the corporation is organized, meetings of the direc- 
tors may be held wherever the directors agree to meet but such 
meetings must be by unanimous consent. Notice of directors 
meetings must be given if required by the by-laws, and ordi- 
narily if one director is not notified of the meeting, the trans- 
actions at such meeting are illegal. Adjourned meetings of the 
board are special meetings and members not present when the 
adjournment was ordered must be notified. 

Directors are bound to use the utmost good faith and cannot 
vote upon a matter affecting their own private interest; they 
cannot secure to themselves an advantage not open to all 
shareholders and must account to the corporation for secret 
profits acquired through breach of trust. This rule applies 
to secret profits. The directors cannot employ the funds of 
a corporation to buy their own shares and the promoters of a 
corporation cannot by collusion make secret profits at the 
expense of the corporation; they cannot buy up claims against 
the company at a discount and then collect the full amount; 
they cannot pay their individual debts with corporate funds. 

Directors however may contract with a corporation in good 
faith, but full and fair disclosure must be made of all facts 
and circumstances and their contracts are closely scrutinized 
by the courts and no director can vote on his own proposition 
if his vote is necessary to authorize the transaction. 

Stockholders have the right to inspect the books and papers 
of a corporation at all proper times and can make copies and 
extracts from the books, or employ experts for the examination 
of the books and this right of the stockholders will be enforced 
by the courts. 

There is a sort of corporation called " joint stock company" 
which is a combining of a number of persons to contribute a 

61 



EVERYDAY LAW 

specified fund for the transaction of business, such capital 
being divided into shares of which each member possesses one 
or more and which are transferable by the owner. They par- 
take of the nature of a partnership and also of the nature of a 
corporation. They both enjoy what is called "perpetual suc- 
cession," so that a transfer by a member of his shares intro- 
duces a stranger into membership and such transfer does not 
work a dissolution of the body and they both act through the 
agency of a board of directors, or trustees. The members of 
a corporation are not liable for its debts except under special 
circumstances, but the members of a joint stock company may 
be liable as partners, except where the statute otherwise 
provides. 

Every corporation has the following powers:— 

First, to have succession by its corporate name for the 
period limited in its charter, and sometimes if no period is 
limited, for an indefinite period or number of years specified 
by statute. Perpetual succession means that the stockholders 
may transfer their stock or if they die their stock may be 
distributed or sold and the new stockholders continually suc- 
ceed each other so that the stock of the corporation is always 
outstanding. 

Second, to sue and be sued by the corporate name. 

Third, to make and use a corporate seal. 

Fourth, to hold such property as the laws of the state 
authorize, and acquire such other property as may be necessary 
or proper for the business of such corporation. 

Fifth, to appoint such subordinate officers and agents as the 
business of the corporation requires. 

Sixth, to make by-laws, not inconsistent with the charter or 
laws of the state. 

Seventh, to increase or diminish by vote of its stockholders, 
the number of directors or trustees who are to manage its 
affairs. 

No corporation has the power to transact any business not 
authorized by its charter or the laws of the state, but it may 

62 



CORPORATIONS 

do all incidental things necessary and proper for the transaction 
of its business. 

A corporation has the power to borrow money for the purpose 
of carrying on its business and unless forbidden by law can 
issue the usual evidences of indebtedness among which are 
notes and bonds. 

A corporation generally has the power to issue bonds on the 

authority of its board of directors or stockholders, and may 
sell its bonds at less than their par value. Sometimes the law 
limits the power of a corporation to issue bonds, by providing 
that bonds shall not v be issued to an amount in excess of a 
certain proportion of the corporate stock. A corporation may 
pledge its bonds for its indebtedness. Such bonds are negotiable 
and may be either registered or coupon; in the one case the 
interest is paid to the registered holders and in the other it 
is payable on surrender of the coupons. In determining the 
validity of bonds issued by a corporation, resort must be had 
to the statutes of the state, the charter of the corporation its 
by-laws and its records, showing how and when and by whom 
the issue was authorized. Generally in offering an issue of 
bonds to the public, a corporation furnishes proof of the law- 
fulness of the issue and an opinion of counsel thereon and the 
bonds are sold on the strength of the opinion of the expert, 
who advises as to whether or not the bonds are legally issued. 
The same rule applies to the securities issued by a municipal 
corporation. Corporations have the right to secure their bonds 
by a pledge of personal property by way of chattel mortgage, or 
may mortgage their real estate. At the present time series of 
bonds have been issued by industrial and railroad and public 
service corporations, which are called, first mortgage bonds, 
second mortgage bonds, etc. These bonds are secured by first, 
second or third mortgages and in case of default on the first 
mortgage, if the property is sold out under it the security of 
the subsequent mortgages is wiped out. Sometimes a corpora- 
tion issues what is called ''debenture bonds," which are noth- 
ing more than formal evidences of indebtedness generally se- 
cured by the deposit of securities with a trustee. 

63 



EVERYDAY LAW 

It is common also for railroads to buy equipment on the install- 
ment plan and to give a mortgage on such new equipment to 
secure the payment of the installments of the purchase price. 
These notes given by a railroad company are secured by an 
instrument in the nature of a chattel mortgage, whereby the 
title to property rests in a trustee until the notes are paid. 
Such securities are often called "car trust certificates". 

A corporation while it has no real personality, can still through 
its agents and employees be guilty of wrongdoing and the corpora- 
tion itself, as well as its agents individually, may be liable 
for such wrongdoing. In other words individuals and corpora- 
tions are very much on the same footing as to their liability 
for the wrongful acts of their agents, but the corporation is 
only liable for wrongful acts committed by the agent while 
acting in the performance of the duties of his employment and 
this is true although the agent or servant may have exceeded 
his orders or acted without or against orders. Thus a rail- 
road corporation is liable for damages to a person injured by 
its trains, or by the wrongful or negligent acts of its employ- 
ees. Wherever a corporation undertakes the performance of a 
duty, the confidence insured by that undertaking creates a 
duty to exercise proper care in its performance, so a corpora- 
tion operating works of public utility as bridge, railway and 
ferry companies, or companies operating water-works, gas or 
electric light works are liable in damages to any person who 
was injured while making a lawful use of such works because 
of the negligence of its employees or agents or because of its 
negligence in failing to keep such works in reasonable repair. 

At the present time there are many statutes in. force in the 
different states regarding combinations in restraint of trade or 
trusts. Statutes of the United States prohibit certain acts 
on the part of railroads, such as giving rebates, and the cor- 
porations are civilly liable for violation of these laws and in 
some cases the officers who have caused such violation are 
also personally liable. 

A corporation may be dissolved by the expiration of the terms 
of existence granted by its charter, or by the general statute 

64 



CORPORATIONS 

when it is organized under a general law, or it may be dis- 
solved by a repeal of a special charter when authority for 
such revocation has been reserved, or by a surrender of its 
charter, or by a forfeiture of its charter because of a violation 
of law after judicial proceedings for the purpose of obtaining 
such forfeiture have been instituted. 

If the charter of a corporation and the laws of the state 
fix no period of limitation for the life of the corporation, it 
continues indefinitely. Some institutions that are incorporated, 
like life insurance companies, educational or charitable organi- 
zations, have perpetual existence from the very nature of their 
business or function. In some states upon the expiration of 
the charter, the directors become trustees to wind up its affairs, 
or a trustee may be appointed by the court for that purpose. 
When a corporation dissolves, or its period of existence expires, 
the corporation, figuratively speaking, dies. 



65 



CHAPTER XIII. 



COURTS. 

UNDER the constitution of the United States, as well 
as the constitutions of the several states, there are 
three branches of government, legislative, judicial and 
executive. A constitution is the fundamental compact 
adopted by the people for their government and which regulates the 
functions of the three branches of such government. The legisla- 
ture is charged with the duty of enacting laws not inconsistent 
with the constitution. The executive officers are charged with 
the duty of administering and executing the law, while the 
judicial function is exercised by the courts. A court is one or 
more persons appointed or elected to administer justice and 
construe the law. There are a great many different courts in 
every state, commencing with justice courts* where an officer 
called " justice of the peace," holds a court for the settlement 
and determination of petty disputes and with a limited juris- 
diction. He has an officer called a "constable," who executes 
the process issued by the justice. Circuit, or district, courts 
are courts exercising what is called * 'common law jurisdiction' ' 
in general matters, and are composed of one or more judges, 
with a clerk to record the proceedings, from which fact it is 
called a "court of record," and an officer called the "sheriff," 
whose duty it is to maintain order in the courtroom during 
the sessions of court and to execute the process of such court. 
Probate, surrogate or orphans' courts have jurisdiction in the 
proof of wills, adminstration of estates and appointment of 
guardians for minors and insane persons. Then come courts 
of appeal, to which any litigant, considering himself aggrieved 
by the judgment of the lower court, may appeal and have the 
proceedings of the lower court reviewed by the appellate 
tribunal. In some states the highest court is called the 
"Supreme Court," in others "Court of Appeals," and is the 
court of final resort charged with the duty of hearing appeals, 
superintending the inferior courts and construing the laws of 
the state. These appellate courts in determining cases write 
opinions which are published and called reports and which are 
regarded as law. 

66 



COURTS 

There are federal tribunals existing under the laws of the 
United States, which consist of a district court, analogous to 
the state, circuit, or district courts, by whom certain contro- 
versies are determined; courts of appeal and the Supreme 
Court of the United States which is charged with the duty 
of superintending the inferior courts and is the final tribunal 
to determine constitutional and such other questions which 
may come before it. The federal appellate courts also render 
written decisions which are published and also called reports. 

It is not necessary to enter more fully into a discussion of 
the jurisdiction of the courts. The trial courts are assisted 
in the administration of justice by a jury, ordinarily composed 
of twelve men who hear the evidence and determine questions 
of fact, under the direction of the court which declares the 
law. Every citizen, except those who are exempted because 
of partly public occupation and are within certain limits of 
age, are subject to be called upon to serve as jurors. 

Attorneys are officers of the court, licensed as such under 
state statutes and subject to punishment for breach of duty. 



67 



CHAPTER XIV. 



DAMAGES. 






IT is a well settled doctrine of the law that every man 
must use his property in a way so as to not injure that 
of another or interfere with its enjoyment. The law also 
holds every person responsible for acts of negligence or 
fraud, by which another is damaged. From these principles, it 
follows that if anyone is injured or defrauded by the negligent 
acts, or fraudulent conduct, of another, the person guilty of 
the wrong must compensate the sufferer by payment of what is 
called "damages." While the law generally allows damages 
for the violation of civil rights, not every civil right that is 
invaded is entitled to compensation. The law has a maxim, 
"damnum absque injuria," which means that although there 
may be an injury, it does not follow that the person injured 
can recover damages, as for example, if a cemetery is extended 
up to adjacent property which may result in a deterioration of 
such adjacent property, the owner cannot recover damages. 
Sometimes where no actual damage may be sustained the law 
permits a recovery for what is called "nominal damages," 
and the mere fact that the precise nature and extent of the 
loss caused by the injury is not capable of being exactly estab- 
lished does not prevent the injured person from the recovery 
of nominal damages; hence it follows that in a suit for damages 
the recovery is often for only a cent or one dollar. 

The subject is divided into two classes: general damages are 
such as the law implies as a natural and usual result of the 
injury complained of, special damages are the unusual losses 
which actually result from the injury, and not to be inferred 
as the necessary result, and some evidence must be given as 
to the extent of such losses in order to fix the amount of damages. 
Thus if a person is injured by being thrown from a street car, 
whereby his leg is broken because it had been started before 
the passenger has had time to alight, he can recover damages 
for pain and suffering, but if he desires to recover for any 
special damage such as loss of time, or expenses of a physician, 
some evidence must be given as to the extent and value of 
such losses or expenses. 

68 



DAMAGES 

Again damages are divided into what is called * 'compensa- 
tory damages, " which are the direct consequence of the act 
and will fully compensate the party injured for the losses sus- 
tained because of the injuries received, and what are called 
* 'exemplary' ' or "punitive" damages, which are given as a pun- 
ishment for the wrong. Thus in an action of libel, if the pub- 
lication has been malicious, the plaintiff can recover not only 
for the actual damage but also a sum in the nature of a punish- 
ment of the guilty party for such malicious act. 

Where a party claims damages, either for a wrong, such as 
personal injury, or because of breach of a contract, he must 
not only show that the injury was sustained but also show with 
reasonable certainty the amount of the damages sustained in 
consequence thereof. 

In an action for a breach of contract the damages are general 
and are such as will compensate the party whose contract 
has been violated for the loss he has suffered; for example, if 
a man agrees to sell another a number of horses at a certain 
price and then refuses to perform his contract he is liable to 
the other for damages which are measured by the difference 
in the price that the other party has to pay for horses to 
fill the contract, and the agreed price, if the price since the 
contract was made has increased. 

In actions for injuries to the person, physical pain and mental 
suffering are always the subjects of compensation; so is fright, 
and disfigurement of the person and the humiliation and insult 
caused by a wilful act. While these injuries have no market 
value and their value cannot always be established with any 
degree of certainty, the jury usually is governed by a con- 
sideration of all the facts and circumstances shown in evidence 
and its ideas in regard to what will be compensatory, but the 
court always has the power to reduce an excessive verdict and 
diminish it if it believes that the damages allowed are ex- 
cessive and unjust under the circumstances. 

Loss of time and impairment of earning capacity are elements 
of damage both in actions for personal injury and for breach 
of contract. Sometimes if loss of profits can be shown such 

69 



EVERYDAY LAW 

loss will be taken into consideration in estimating the damage, 
but mere speculative profits will not be allowed, but only such 
profits, in case of breach of contract, as were supposedly 
within the intent of the parties at the time the contract was 
made. If a defendant by his wrongful act has maliciously 
destroyed the reputation or business credit of plaintiff, such 
business losses must be made good by the defendant, but no 
damages in any way will be allowed for injuries to an illegal 
business or for breach of an illegal contract. 

A party can recover as damages reasonable expenses which 
he has incurred on account of the wrong or injury sustained, 
but this element of damages is looked upon by the courts with 
suspicion and must be clearly shown. In actions for the breach 
of a contract, the expenses which are the natural result of the 
breach of a contract can be recovered and all necessary ex- 
penses incurred by a party in complying with the terms of a 
contract which has been violated by the other party. 

A man can recover damages for an injury to his wife, whereby 
he has been deprived of her society and service, but what seems 
to be apparently wrong is that a wife cannot recover damages 
for the loss of the society and companionship of her husband. 
A parent can recover damages for an injury to an infant child 
and in some states an executor or administrator can recover 
for the death of his testator. 

The law will always in considering the compensation for 
injuries recognize the difference between an injury which is the 
result of accident and that which is willful, premeditated or 
accompanied by insult. In the latter case the jury is author- 
ized not only to allow the actual damage, but punitive damages. 

Damages may be allowed for the wrongful detention or seizure 
of property, or for a breach of a contract or agreement, or for 
injuries to property occasioned by the negligence of another. 

Physicians and surgeons are liable for "malpractice," which 
means their negligent acts in failing to exercise such care and 
skill as are ordinarily exercised under like circumstances by 
other physicians and surgeons of the same locality possessing 
average skill. 

70 



DAMAGES 

Interest is a sort of legal damage allowed for the wrongful 
detention of money as well as for its use or hire. 

Sometimes in making a contract it is provided that if one 
party violate the contract, the other shall recover a specified 
amount as "liquidated damages. " This means that it is agreed 
by the parties that if the contract is violated the person so 
violating the contract shall pay a specified sum as damages 
without further proof as to their amount. The courts do not 
always look with favor upon such an agreement and, if the 
amount fixed for liquidated damages seems to be unreasonable 
such sum will be considered to be in the nature of a penalty, 
and the courts will only allow the actual damage. The rule 
laid down for determining whether a contract for liquidated 
damages will be allowed to stand is that they will be allowed 
either where the damages are uncertain and not capable of 
being ascertained, or where from the nature of the case and 
the terms of the agreement it appears that the damages have 
been fairly calculated and adjusted and the amount is expressed 
in the contract. 

Where an act has been done in good faith even though it 
may result in injury, there can be no recovery of examplary 
or punitive damages. The question always is whether the 
act was willful and wanton and if so the jury can award 
damages as a punishment. 

There is no liability for a wrongful act causing death unless 
right of recovery is given by statute. 



71 



CHAPTER XV. 



DESCENT AND DISTRIBUTION. 

WHEN a man dies "intestate," that is without leaving 
a will, his property goes by operation of law to his 
heirs subject to the payment of his debts, and the 
allowances given by law to his widow such as dower 
or a year's support. In former times his real estate was not 
subject to the payment of debts, but statutes of the different 
states now provide that both real and personal property shall 
descend alike to his heirs subject to the payment of his debts. 
Descent, or hereditary succession, is the title whereby a 
man on the death of his ancestor acquires his property by right 
of representation as his heir at law. Descents are of two kinds: 
"lineal, " as from father or grandfather to son or grandson, and 
"collateral," as from brother to brother, or cousin to cousin. 
Technically the term, "descent," applies only to the trans- 
mission of real estate, but it is now used to denote the course 
of transmission by operation of law of both real and personal 
property when the owner dies without a will, or his estate or 
any part thereof is taken as intestate estate. Transmission of 
real estate by devise, or of personal property by bequest under 
a will, is different from transmission by descent. Persons 
taking by descent take by mere operation of law, while those 
taking under a will are regarded as taking not by descent, but 
by what is called "purchase." 

Distribution denotes the division of the personal property of 
an intestate after administration, or the payment of debts 
and expenses of administration, among the persons entitled as 
heirs, or nearest of kin, and while the widow is not strictly 
speaking an heir of her husband, or he of her, in many states 
she is entitled at her election to take a child's share of the 
estate, or if he dies without child or children, to one-half 
thereof and so he inherits from her to a like extent. In some 
states, as Louisiana, a man cannot dispose of his property by 
will to the exclusion of his heirs of more than a certain per- 
centage; and in other states where the rule as to community 
property prevails he can only dispose by will of such property 

72 



DESCENT ANP DISTRIBUTION 

as he had acquired before marriage and one-half of that ac- 
quired after marriage, he and his wife being deemed joint 
owners of all property acquired after marriage. 
The rights of heirship become vested at the death of the intestate. 

In some states if a man is convicted of crime he becomes what 
is called "civilly dead," as where he is sentenced to imprison- 
ment for life and in such cases his property descends as if he 
were dead. 

In probably every state, statutes regulate the rights to a 
man's property after his death and specify how it shall de- 
scend. The statutes in force at the time of death of an intes- 
tate govern the disposition of the estate and the rights of 
inheritance of real estate always depend upon the laws of the 
state where such real estate is situated. 

Usually the rights of descent and distribution of the property 
of an intestate are governed by the laws of his domicile or home. 
All property of every kind, rights, claim and interests which 
are certain, are subject to descent and distribution. 

The words "next of kin" denote the persons next of kindred 
to the deceased, that is those who are most nearly related to 
him by blood, but generally the rights of inheritance are 
defined by the statutes of the state. Technically the words 
only include blood relatives. The "ancestor" means anyone 
from whom an estate is inherited. Degrees of kindred are 
determined by the statutes of the state, either where the de- 
ceased died, or in the case of real estate, where it is situated. 
The degree of relationship is ascertained by counting up the 
line to the common ancestor and then down to the heir. At 
common law collateral kindred could not inherit if they were 
of the half blood only, but at the present time the statutes 
give the half blood the right of inheritance, although some- 
times they only take one-half as much as kindred by the 
whole blood. If a person dies intestate leaving real estate 
it goes to his legal heirs. This term means children or chil- 
dren's children, but does not include collaterals, hence a 
husband is not the descendant of his wife. It makes no differ- 
ence whether the children of the man are by one wife or 

73 



EVERYDAY LAW 

several, and a child born after a man's death takes equally 
with those who were living at the time of his death. 

The general rule of descent and distribution is that if any 
person having title to any real or personal estate undisposed 
of by will, or otherwise limited by marriage settlement, shall 
die intestate, it shall be distributed to his kindred, male or 
female, subject to the payment of his debts and the widow's 
dower, first to his children or their descendants in equal parts; 
if there be no children or their descendants, then to his father, 
mother, brothers and sisters and their descendants in equal 
parts; if there be no children or their descendants, father, 
mother, brother or sister nor their descendants, then to the 
husband or wife, if there be no husband or wife then to the 
grandfather, grandmother, uncles and aunts, and their de- 
scendants in equal parts; if there be no children or their 
descendants, father, mother, brother, sister, or their descend" 
ants, husband or wife, grandfather, grandmother, uncles, aunts, 
nor their descendants, then to the great grandfather, great 
grandmother and their descendants in equal parts, and so on 
in other cases without end passing to the nearest lineal ances- 
tors and their children and their descendants in equal parts. 

Sometimes the statutes provide that if there be no kindred 
of a man on his father's or mother's side capable of inheriting, 
the whole shall go to the kindred of the wife or husband in like 
course as if such wife or husband had survived the intestate 
and then died entitled to the estate. The statutes generally 
provide that where there are several lineal descendants all of 
equal degree of consanguinity to the intestate, or his father, 
mother, brothers and sisters, or his grandfather, grandmother, 
uncles and aunts, come into title to an estate, they shall take 
by persons, or "per capita, " but where a part of them are 
dead and part living and the issue of those who are dead have 
a right to partition of the estate, such issue shall take "per 
stirpes,' ' that is the share of the desceased parent. Per capita 
means taking as individuals, while per stirpes means the taking 
by class, that is if a man is deceased, when if he were living 
he would have been entitled to a share in an estate, and he 

74 



DESCENT AND DISTRIBUTION 

leaves a number of children, these children take the share of 
the deceased parent, and if there are grandchildren they take 
the share of the parent as a class no matter how many there be. 

In some states if a wife dies after a child is born, her hus- 
band has what is called an "estate by the curtesy, " that is the 
use of the wife's real estate during his life and he is entitled 
absolutely to all her personal property. The rights of husband 
and wife in the property of each other are now generally speci- 
fied by statute and estates by the curtesy in some states is 
abolished. 

An "advancement" is a regular giving of money or property 
to a child by a parent in anticipation of death and in the dis- 
tribution of an estate such advancement must be deducted 
from the child's share, but it must be clear that the parent 
intended the property as an advancement, otherwise it is 
considered a gift. Where there have been advancements to 
children ,by a parent, upon his death the advancements are 
considered part of the estate, which is called bringing them 
into ' 'hotchpot." Advancements do not bear interest until 
after the death of the ancestor. 

A bastard can only inherit from his mother and if he leaves 
property but no descendants his mother will inherit. 

An adopted child is considered the same as a lawful child, 
so far as inheritance is concerned, but if such adopted child 
die in the lifetime of the person adopting him, his heirs will 
have no share in the estate of the foster parent. On the other 
hand, the heirs of the foster parent cannot inherit from an 
adopted child, but his property goes to his own heirs without 
regard to the adoption. 

To determine the rights of inheritance, resort must always 
be had to the laws of the State and it is difficult, if not im- 
possible, to lay down any rules which will be of universal 
application. 



75 



CHAPTER XVI. 



DOWER. 

BY the common law of England a wife upon the death of 
her husband, was entitled to use for the term of her 
natural life of one-third of the lands of her husband. 
This was called "dower." In modern times the term' 
is applied not only to the interest given a widow in the 
lands of her husband, but also to her interest in the personal 
property as well. In every state the right of dower is recog- 
nized by law and the word is used to denote the interest which 
a widow has in the property of her husband after his decease. 
This interest varies in different states and its extent will 
generally depend upon the number of children that are left. 
The object of the law in allowing dower is to furnish means 
of support for the wife and for the nurture and education of 
minor children and dower has always been considered a sacred 
right to be guarded and protected by the courts. Hence a 
widow cannot be deprived of dower by the will of her husband, 
nor can creditors deprive her of such right, but dower remains 
unless she herself has parted with it by her voluntary act, 
such as joining in a deed of the property, or signing a mort- 
gage, and she can claim her dower and take what the law 
gives her. A woman can also deprive herself of dower by 
entering into a contract with her intended husband before 
marriage by which for a consideration she releases her right 
of dower in any property that he may then have or thereafter 
acquire. Such a contract is called a "marriage settlement," 
and if properly executed and recorded bars the wife of dower, 
if it so provides. 

The common law right of dower only extended to a life 
estate in one-third of the lands of her husband, but in most 
states the statutes give a widow an absolute right to a certain 
amount of money, exclusive of the claims of creditors, and also, 
at her election, a child's share in the estate, or if there are 
no children, a specified interest, usually one-half. Sometimes 
she is allowed in addition an allowance for a year's support. 
The absolute dower for example in some states is $400, and 

76 



DOWER 

the allowance for a year's support of herself and minor children 
is allowed to the widow in proportion to her needs and size 
of the estate, although nothing may be left for creditors. 

If she takes a child's interest its extent or value may de- 
pend upon what is left of the estate after payment of debts 
and expenses, but if she so elects she can claim her dower 
independent of creditors and stand upon her legal rights. 

In former times the husband had the use of the lands of 
a wife during his life in case a child had been born of the 
marriage called an "estate by the curtesy,' ' and in most of the 
states the statutes give a husband the same rights in the 
estate of his wife as the wife has in the estate of her husband. 

Legally speaking three things are necessary to make complete 
a widow's right of dower. The first is a valid marriage, the 
second is possession by the husband of the land in which she 
is to have dower, and third the death of the husband. Before 
the death of the husband the right of dower is called "incho- 
ate," but does not ripen until after the death. If her marriage 
is absolutely null and void, as for example, if the man had 
another wife living at the time she can claim no dower be- 
cause such a marriage is absolutely null and void. A widow 
has no right of dower in land which is held by her husband in 
trust and there must be a possession of the husband of the 
land, or what is called his "seizin." Dower is allowed in all 
kinds of lands and tenements, but not in what is called an 
"incorporeal" right, or "easement," which is a right under a 
license to pass over the property of another, as for example 
to a spring, nor is there any right of dower in a burial lot. 
A widow has no right of dower in real estate purchased by a 
partnership with partnership funds and held by it for its own 
use. A widow can claim dower as against a mortgage which 
she has not signed, but not as against a mortgage given for 
purchase money, and when a woman marries a man who has 
lands that have already been encumbered by a mortgage, such 
land is subject to the payment of the mortgage before the 
widow can claim any dower. 
That statutes of all the states provide how inchoate dower 

77 



EVERYDAY LAW 

can be conveyed, as by a wife joining in a deed or mortgage, 
and also how dower can be set off to the widow. 

A divorce deprives a wife of her right of dower, whether pro- 
cured by. him or her. Sometimes, however, the laws of the 
state provide that if a woman obtains a divorce for the mis- 
conduct of her husband her dower shall remain. A wife can 
have no dower in lands acquired by her husband subsequent 
to a divorce and a wife living in adultery is generally barred 
of dower. Although a widow may marry again, she is not 
cut off from her dower in the estate of her first husband. 

It is customary when land which is in the name of the 
husband is sold for the wife to join in the deed and such 
joining cuts off her dower, but if the law imposes any formali- 
ties, such as a private examination by the officer taking the 
acknowledgment separate and apart from her husband, such 
formalities must be complied with or else dower will not be 
released. 

The methods by which a widow can recover dower in the 

lands of her husband, or in his estate, are usually regulated by 
statute and her right is generally established in courts of 
probate jurisdiction, although different procedure is prescribed 
in the various states. 

Often dower is assigned in particular lands and when the 
widow enters upon such lands she has a life estate therein 
which is absolute and she cannot be compelled to sell it but 
she can act in regard to it as any life tenant can with his 
life estate. Her estate is not dependent upon her continued 
occupancy of the lands. Crops growing on the lands at the 
time of the assignment of dower will pass to the widow. A 
widow, like any other tenant for life, is liable to the heirs or 
the persons entitled to the land after her death for any waste 
of such property, such as cutting off the trees. A widow may 
cut and take from the dower lands her fire wood and timber 
necessary for repairs to building and fences, but she cannot 
sell off the timber. Sometimes she may be liable for failure 
to repair the buildings. She may work any mines on the 

78 



DOWER 

premises. She is liable for taxes assessed on her dower lands. 
The widow's death ends her dower in lands or personal prop- 
erty except those which she has taken absolutely. 



79 



CHAPTER XVII. 



EXEMPTIONS. 

IN former times when a judgment was rendered against a 
man any and all of his property might be seized by the 
sheriff and sold to pay the debt, and even himself put 
in prison. Even his wearing apparel might be taken, 
provided the sheriff was not obliged to take it off of the 
debtor's back, but in modern times, from reasons of public 
policy and in order that a man may not be deprived of the 
means of supporting his family, a certain amount of property, 
or certain articles of household furniture, or implements of 
his trade, are exempted from seizure under an execution. Under 
the laws of all the states a, debtor may hold property to a 
specified value exempt from any claims of his creditors. If a 
man is married, or is the head of a family, the exemption is 
greater than that allowed to an unmarried man. 

The dwelling, or homestead, of a married man, or head of a 
family, is also exempt from execution, and we will consider 
the subject of homesteads under that title. 

Exemption laws have no extraterritorial force. They form 
part of the remedies for collection of debts and exemption is 
a personal privilege, and not a right, and is governed by the 
law of the place where the judgment is sought to be enforced. 
Sometimes a man may lose his right to an exemption by 
attempting to remove his property out of the state. 

The law of exemptions rests on statute alone and no debtor 
can claim any exemptions that are not allowed by the laws 
of the state of his residence. All such statutes are construed 
liberally and generally an officer levying an execution is re- 
quired to notify the debtor of his rights of exemption. The 
right of exemption is personal and only the owner of property 
carl exercise it, although often a wife in the absence of her 
husband can make claim to the exemptions allowed him by 
law. No exemption is allowed out of partnership property. 
Sometimes there is no exemption on a debt incurred for house- 
hold necessaries, such as food, or for board or lodging. Some- 
times no property is exempt from a claim of a laborer or ser- 

80 



EXEMPTIONS 

vant for wages, and there is no exemption on an execution on 
a judgment for debts due the government such as taxes. 

The statutes generally provide that certain property shall 
be exempt when owned by the head of the family. The primary 
meaning of the word "family," is husband and wife and chil- 
dren, but under a liberal interpretation it is deemed to include 
all the persons living together in one house as a family. A 
man with whom several relatives live who are supported by 
him may be a head of the family although he is unmarried. 
There must be a dependence on the part of the other members 
of the family upon the head and either a legal or moral obli- 
gation on his part to support them. The husband, and not the 
wife, is the head of the family, but a widower or widow may 
sustain such relation. Although a wife obtain a divorce with 
the custody of the children if the husband still continues to 
support the children he may be the head of the family. A 
person who moves into a state with his family and personal 
property with the intention of living there is a resident of the 
state and entitled to his exemption, but if he has absconded 
or attempted to remove his property from the state of his 
former residence, he may lose his rights under the laws of 
the state of his first residence. 

The statutes generally specify what property shall be exempt; 

for example, a certain number of work animals, cows, sheep 
hogs and implements of agriculture, as well as certain articles 
of household furniture, are allowed to a farmer. Tools and his 
implements of trade are allowed to a mechanic. The library 
and instruments of a professional man are exempt. Certain 
supplies of food articles and animals furnishing food are ex- 
empt and wearing apparel of a man and his family are included 
in the exemptions. The wages of a man are usually exempt, 
or, if not entirely exempt, only a certain percentage can be 
taken on execution. This term "wages," generally means the 
compensation received from manual labor and does not include 
what is generally meant by the words "salary." 

The salary of public officers is exempt because of reasons of 
public policy, and in many states life insurance policies, or the 

81 



EVERYDAY LAW 

money received from fraternal beneficiary associations, is ex- 
empt and cannot be taken in payment of the debts of the de- 
ceased or the beneficiaries. 

Under the statutes of the United States pension and bounty 
money is exempt as well as the property purchased with it. 

From motives 6f public policy a man generally cannot con- 
tract in advance to waive, or agree not to assert a claim to, 
the exemptions allowed by law, although if his property is seized 
on execution he may refuse to assert his right. Often it is 
provided by law that if the husband fails to set up the right 
his wife may do it for him or in her own right claim the 
benefit of the law. 



82 



CHAPTER XVIII. 



GARNISHMENT AND EXECUTION. 

AFTER a judgment has been obtained against a debtor, 
it is usual for a writ, called an "execution," to be 
^ issued directed to the sheriff commanding him to 
seize any property of the debtor which he can find 
with which to satisfy the judgment. When the sheriff seizes 
any property under such a writ, it is called making a "levy." 
Often some other person has in his possession, or under his 
control, property belonging to the judgment debtor, or owes him 
money, in which case the sheriff serves on such person, who 
is called the "garnishee," a summons called a "writ of garnish- 
ment," commanding him to come into court and tell what 
property he has, if any, in his possession or under his control 
belonging to the debtor, or state how he is indebted to such 
debtor, and when the answer is filed if the garnishee admits 
having property of the debtor, or that he owes him money, 
the court directs him to deliver it, or pay the money over, 
to the sheriff. 

In different states different names are applied to the last 
named process. In some states it is called "trustee process," 
in others "factorizing process" or "attachment execution." The 

right only exists because of the statutes of the state and they 
always prescribe the form of the proceedings and the pro- 
cedure necessary to charge the garnishee. 

Generally there must be a judgment against the original 
debtor and it must be a final judgment and be for money. 
Xo person can have the right of garnishment except the judg- 
ment creditor and the same rights of exemption lie against 
the writ of garnishment as in the case of an execution. The 
garnishee cannot be held liable unless at the time the proceedings 
are instituted, he either owes the defendant or has property 
belonging to him under his control. If payment of the debt 
has been made before the writ is served, there is no right of 
garnishment. The writ lies against persons and corporations, 
but not against a city, or state, or the United States, because of 
reasons of public policy. A trustee cannot be garnished by a 

83 



EVERYDAY LAW 

creditor of the beneficiary of the trust, and the rule is that 
. under no circumstances can a garnishee be placed in a worse 
condition than he would have been had the defendant brought 
suit directly against him. If the demand which the debtor 
has against a party is not payable in money but in a com- 
modity or goods this 'sort of debt cannot be garnished. What- 
ever is exempted by law from execution is exempted from 
garnishment, such as life insurance. 

The procedure of garnishment is regulated by law and in 
claiming the process all the requirements of the statute must 
be observed. 



84 



CHAPTER XIX. 



HOMESTEAD. 

IN ancient times no mercy was shown to an unfortunate 
debtor. All his property was liable to be seized and 
often he himself was imprisoned, but in modern times, 
in order to enable a man to maintain a home where his 
family may be sheltered and he and they be relieved from the 
possibility of being stripped of such a refuge, the law gives 
every head of a family the right to retain the family residence, 
or dwelling house, and everything connected therewith which 
is necessary for its more perfect enjoyment, such as barns, 
outhouses and gardens, or land, within a certain value, as a 
1 'homestead,* ' which cannot be taken away from him by pro- 
cess of law. In the country it is usual for forty acres of land, 
together with the dwelling house and in cities, or towns, a 
dwelling not exceeding a certain amount in value to be set off 
to, or claimed as a homestead, by the debtor. The right 
depends entirely upon statute and does not exist unless the law 
gives it, but it is believed that homestead exemption laws 
have been enacted in every state of the Union. Not only is 
a man entitled to exemption during his life, but after his 
death his wife and minor children are entitled to the home, 
the widow during her life and the children during minority. 
All homestead laws must be liberally construed in favor of the 
debtor and apply to property acquired both before and after 
their passage, and when rights to a homestead have once been 
secured by the person entitled thereto, the right cannot be 
taken away by the legislature. The value and extent of the 
homestead is determined by the law in force when the debt 
was created, but homestead rights of a widow and children 
are determined by the law in force at the time of the death 
of the husband or parent. No one can have more than one 
homestead. 

Under the laws of the various states only a family is entitled 
to a homestead and such right is confined to a head of the 
family. The law is liberal in determining what persons con- 
stitute a family. It may be composed not only of a father, 

85 



EVERYDAY LAW 

mother and children, but also of a father, or grandfather, or 
grandchildren or brother and sister. Even an unmarried man 
and his illegitimate offspring may be entitled to a homestead. 
By "head of a family" is meant a man or woman with whom 
reside persons dependent upon him, or her, for support, or those 
whom he or she is under a moral or legal obligation to sup- 
port. It does not include the hired servants or boarders. 
Every person is the head of a family who keeps house and has 
living with him persons whom he is supporting because of some 
legal or moral duty. The fact that the person claiming a 
homestead is unmarried does not deprive him of the exemp- 
tion if he is supporting as members of his family relatives or 
dependent persons. 

Homestead laws are for the benefit of residents of the state 
and therefore a non-resident cannot claim the exemption of a 
homestead although if a person is a citizen of a state it does 
not require him to remain permanently within the jurisdiction 
provided the premises is his usual home. It is necessary that 
the person claiming a homestead right be actually an occupant 
of the premises and such premises must be occupied in good 
faith. A man may even use the premises occupied by him 
as a hotel and yet it be his homestead. 

Generally the law provides a method of setting-off a homestead 

and all directions of the statute in regard to setting apart a 
homestead must be followed. Rents and profits arising from 
the homestead, so long as it remains such, are exempt be- 
cause the person entitled to the homestead may not only occupy 
it himself but, if he so desires, use it for purposes of profit. 
Under some circumstances a homestead may be disposed of 
and the proceeds used for the purchase of another. 

This right cannot be claimed in partnership property as 
against partnership creditors, but a husband is entitled to a 
homestead in property the title to which is in his wife's name 
but for which he has paid. In states where the husband and 
wife hold in common what is called "community property," 
the homestead remains but the right does not exist in prop- 
erty held by a man in trust. 

80 



HOMESTEAD 

Homesteads are not exempt from taxes, nor from a liability 
for a mortgage executed by the parties entitled thereto, nor 
can a homestead be claimed as against an obligation incurred 
for purchase money. 

A homestead is exempt from seizure under judgments against 
its owner and liability after his decease to be appropriated for 
the payment of the expenses of the last illness and funeral. 

The owner of a homestead may sell or mortgage it, but no 
mortgage of a homestead is valid unless the wife has joined 
in the conveyance. Sometimes, however, the law limits the 
right of the head of a family to transfer or encumber the 
homestead. It follows that if a homestead can be mortgaged 
or sold it may be abandoned and one way of abandoning a 
homestead is to sell it. The head of a family cannot by will 
deprive his widow and children of the homestead even though 
it is the only property he may have at the time of his death, 
because it is the policy of the law that a man's family after 
his decease shall be protected by a home. 

Under most statutes the right to a homestead exists in the 
children of a widower so long as they are minors, and during 
minority the children are incapable of waiving or abandoing 
their homestead rights but may enforce them even though 
they may be absent from the home place or have removed 
from the premises. 

Generally, even though the title to property is in the wife, 
the homestead right after her death survives in favor of the 
husband. Under the statutes of some states there may be an 
allowance out of the estate of a deceased person in lieu of the 
homestead. 

As has been said, a homestead may be abandoned or the right 
lost, sometimes by a dissolution of the family, or by removal 
from the homestead, but a removal for temporary purposes or 
for the education of children or account of health will not 
terminate the right if there is an intention to return. A home- 
stead right cannot be lost by an agreement in advance not to 
assert such right and neither husband nor wife can waive the 
right to the homestead of the other. Even a conveyance of the 

87 



EVERYDAY LAW 

homestead absolutely or by way of mortgage cannot be made 
unless authorized, or at least not forbidden, by statute. 






88 



CHAPTER XX. 



HUSBAND AND WIFE. MARRIAGE AND DIVORCE. 

MARRIAGE. The relation of husband and wife in law 
is created where a man and woman, who are not 
forbidden so to do, enter into a contract of marriage. 

This contract is peculiar in that it cannot be dis- 
solved at will by either party during the lifetime of the other, 
or by mutual consent. It is a relation existing for the benefit 
of society and the state and in every state laws exist pro- 
viding who may enter into the relation, fixing the powers of 
the contracting parties and also providing that the marriage 
may be annulled or dissolved by proceedings for the purpose 
brought in the proper court. Marriage is a civil contract re- 
quiring only the consent of parties capable of contracting and 
no religious ceremony is necessary, nor can ecclesiastical author- 
ity in any way control such relation. The legislature of each 
state is the only authority which has the power to regulate con- 
tracts of marriage, fix the qualifications of the contracting par- 
ties and declare what forms or proceedings are necessary to 
constitute a marriage and what duties and obligations are cre- 
ated thereby and how the relation may be dissolved. The 
validity of a marriage is determined by the place where it takes 
place. For example, first cousins forbidden to marry by the 
law of their residence may go into a state where no such 
restrictions exist and there marry. To constitute a valid mar- 
riage, it must be entered into with the consent of both parties 
freely given and such consent may be expressed by a verbal 
or written contract, or by taking part in a ceremony. Fraud 
practiced by one party on the other, or a consent extorted by 
compulsion or threats of violence so. as to terrorize the other 
party, makes the marriage voiadble at the option of the one 
deceived or imposed upon. 

Males, if above the age of twenty-one, and females above 
the age of eighteen are free to contract marriage, unless they 
are related within the forbidden degrees of consanguinity. 
Statutes regulate what degrees of consanguinity shall prevent 
marriage." Usually where a minor contracts marriage the con- 

89 



EVERYDAY LAW 

sent of the parent or guardian is required, but a marriage 
without such consent is not void although it may be annulled 
afterwards by the proper proceeding by the minor after attain- 
ing majority, or acting by a guardian, but if the parties con- 
tinue to live together after the minor has reached majority 
it will be deemed that such marriage is ratified. 

What is called a "common law marriage' ' is where a man 
and woman, instead of having a ceremony performed, agree 
with each other to sustain the relation of husband and wife 
and live together in pursuance of that agreement, holding each 
other out to the world as sustaining such relation. Such a 
marriage is valid unless expressly forbidden by statute. 

In most every state, for reasons of public policy, it is pro- 
vided that persons desiring to contract marriage must obtain 
a license from the proper authority, and penalties are imposed 
upon officers- or ministers performing a marriage ceremony 
without such license. If a marriage is celebrated without a 
license it is not void but only subjects the official performing 
the ceremony, or sometimes the parties, to penalties if such 
penalties are imposed by law. 

A contract of marriage is of no validity if either of the parties 
is insane, unless the contract is made in a lucid interval. What 
constitutes mental capacity to an extent sufficient to avoid a 
marriage depends upon the particular circumstances of each 
case. Marriage between parties closely related by blood, as 
between a brother and sister, or in some states, first cousins, 
or within certain other degrees of blood relationship are void. 
So the law often declares void a marriage between persons of 
different races as between a white person and a negro. A 
marriage between parties either of whom has living at the time 
another husband or wife from whom he or she has not been 
divorced is absolutely void. No license unless one is required 
by law is necessary for a marriage. Such license, if required 
by law, must be issued by the proper officer who is liable 
for a wrongful issuance of the same and if a notice is required, 
as by publication of the banns or intention to be married, the 

90 






HUSBAND AXD WIFE. MARRIAGE AND DIVORCE 

parties must comply with such law or they may be subjected 
to a penalty. 

The statutes generally provide by whom a marriage may be 
solemnized and generally it must be solemnized by some 
clergyman, regularly ordained and settled in the work of the 
ministry; or be performed by a civil magistrate such as a 
justice of the peace, mayor, or judge of a court. No particular 
form of words is essential to a marriage it being sufficient if 
in the presence of the officer or clergyman the parties agree 
to enter into the relation of husband and wife. 

When a marriage is void no rights can be secured thereby 
and such marriage may be held void if attacked although the 
parties are dead. A marriage which is voidable only, that 
is one which will be set aside upon proper proceedings must 
be attacked during the life of the parties, but if the marriage 
is absolutely void it needs no legal proceeding to declare it so. 

In some states all marriages are declared by law to be void 
which are not attended with certain formalities evidenced by 
record or other writing and marriage in such case without com- 
pliance with the required formalities is void, but, in the 
absence of such statutes, a marriage may be proved by any- 
one who saw the ceremony or even by the parties themselves 
or by the record, or, in the case of a common law marriage, 
by the testimony of parties to whom the man held out the 
woman as his wife. Generally a marriage may be established 
by the fact that a man and woman have openly lived together 
as husband and wife and treated each other as such, but of 
course such a presumption may be contradicted by direct 
evidence that the parties were never married. 

A marriage that is voidable may be annulled by a proper pro- 
ceeding in court for that purpose, or the parties may be di- 
vorced by an action brought in court by either. Laws some- 
times provide that if either party is sentenced to life imprison- 
ment for a felony such sentence shall operate as a dissolution 
of the marriage but the parties cannot divorce themselves. 

Divorce. From reasons of public policy the legislature of 
probably every state has provided that a marriage may be dis- 

91 



EVERYDAY LAW 

solved for certain causes specified in such statute. Sometimes, 
unless forbidden by the Constitution of the State, the legisla- 
ture can pass an act dissolving a marriage. Divorce is the 
legal dissolution of a marriage by a court or other lawful author- 
ity upon a proper proceeding brought for that purpose. Two 
kinds of divorce were recognized by the common law, one which 
is called a divorce "a mensa et thoro," which is a judicial 
separation from bed and board without a dissolution of the 
marriage, and divorce "a vinculo, " which means an absolute 
dissolution of the bonds of matrimony. Suits for divorce must 
be brought in the proper court having jurisdiction and the stat- 
utes of the different states provide what courts shall have the 
authority to decree divorces and where the proceedings must 
be brought. A suit for divorce must be brought in the place 
required by law, usually the place where one party resides, 
and generally it is provided by law that this residence must 
have continued for a certain period, as for example one year, 
and the statutes also provide upon what grounds marriage can 
be dissolved and what are sufficient causes for divorce. These 
grounds for divorce are much the same in different states; 
usually they are adultery by the opposite party, conviction of 
a crime, desertion for a specified period, acts of violence 
to such an extent as to injure the health or make the condi- 
tion of the other intolerable, cruelty, concealment of previous 
unchastity, pregnancy by another man, or physical incapacity, 
or becoming an habitual drnkard, or common vagrant, or simi- 
lar causes. At the present time there is a general disposition 
on the part of legislatures to limit the causes for divorce and 
make it more difficult to obtain. Whether or not a divorce 
will be granted depends upon the laws of the various states 
and legal advice should be taken in regard to the same. When 
a divorce is obtained without valid personal service it may 
not be recognized in the state where the opposite party 
resides. 

Rights of Husband and Wife. Under the common law of 
England, upon which our law is based, husband and wife were 
in its view but one person. The legal existence of the wife was 
for most purposes suspended during her marriage, but modern 

92 



HUSBAND AND WIFE. MARRIAGE AND DIVORCE 

statutes have removed most, if not all, of the common law 
disabilities of married women so that at the present time she 
can act as if she were single. The law of the state where 
real estate is situated governs the rights of husband and wife 
therein but the law of the place where the couple reside de- 
termines the rights of the parties in personal property. The 
law in force at the time of the marriage determines the 
personal rights of the parties. 

The husband is the head of the family and has the right 
to regulate the expenses of the household, determine who may 
be visitors and generally control its management. He has 
the right to select the family name and the wife by custom 
takes the surname of the husband. A fact not generally known 
is that, unless forbidden by statute, a man may change his 
name at his pleasure, providing it be not done for fraudulent 
purposes. The husband is entitled to the custody of the children 
and both husband and wife have the right to the society of 
each other and are bound to live together. A husband has 
the right to select the residence and it is the wife's duty to 
follow her husband to the domicile selected by him and her 
refusal to do so without reasonable cause constitutes desertion. 
A husband, however, cannot arbitrarily establish the residence 
in a place attended with personal danger, or is unhealthy to 
such an extent as to make it dangerous to health to reside 
there. It is the duty of the husband to support and maintain 
his wife and children and what constitutes such support de- 
pends upon his circumstances and condition in life. A hus- 
band however is not obliged to support his step-children. 
At common law the personal property and household furniture 
of the family belong to him and he can dispose of it at his 
pleasure. 

The reciprocal rights and duties of husband and wife in mod- 
ern times are practically fixed by statute which in most states 
has entirely removed the disabilities of the wife while still 
maintaining the obligations of the husband toward her. In 
most states she holds her property in her own right and can 
dispose of it as she chooses and has power to bind her hus- 

93 



EVERYDAY LAW 

band for the support of herself and children. These laws 
vary so that it is difficult if not impossible to make state- 
ments which will apply in every state. Wearing apparel of 
the wife and her jewels are in law called her "paraphernalia" 
and while her husband, except where the statute otherwise 
provides, can dispose of it at his pleasure during his life, in 
case of his death it does not pass to his administrator as other 
personal property nor can it be disposed of by his will but 
it belongs in such case absolutely to the wife. At common 
law a husband could take possession of his wife's personal 
property, which is called "reducing it to possession," but if 
he did not do so during his life the wife retains it. 

Generally the real estate of the husband can only be sold 
or encumbered by the joint conveyance of himself and wife 
because of her dower interest. Statutes now provide in what 
manner deeds of real estate shall be executed by husband and 
wife. Before the statutes were passed relieving married women 
from their common law disabilites a wife could not execute a 
note or become security for her husband or anyone else, nor 
could husband and wife after marriage make contracts with 
each other. He was also liable for her debts contracted be- 
fore marriage. 

A wife can bind her husband, as has been before said, for the 
necessaries of life which include food, clothing, lodging, ordi- 
nary household supplies and expenses of sickness, but do not 
include extravagant or unreasonable purchases, and the court 
will always consider the station and means of a husband in 
determining to what extent she is authorized to incur debts 
on his account. The husband will be liable for the necessaries 
of his wife even though he is separated from her or may be of 
unsound mind. The husband, of course, being bound to sup- 
port his wife, must provide her with the necessaries of life, 
medical attention in case of sickness and defray the expenses 
of her burial if she dies. 

Sometimes before marriage is entered into between two 
people, they make an agreement that each shall retain his or 
her property free from any interest of the other, which is called 

94 



HUSBAND AND WIFE. MARRIAGE AND DIVORCE 

making a "marriage settlement." All kinds of property is the 
subject matter of such agreements and as a rule this kind of 
a contract is entered into for the purpose of either making 
provision for the wife's support in case of misfortune or se- 
curing to her the use of her separate property or limiting her 
interest in the property of her husband. These settlements 
must always be made before marriage and marriage consti- 
tutes the consideration of such a contract. 

Husband and wife may make gifts to each other and in some 
states contract with each other the same as any other two 
persons. If a wife commit a crime in the presence of her 
husband she is generally not liable as it is presumed that she 
is impelled thereto by her husband and he becomes liable. 
Where the common law disabilities exist a wife cannot appoint 
an agent or convey property, but where the disabilities are 
removed she can do both and make any kind of a contract 
without her husband's consent except conveyance of land. 

Even where the disabilities of married women do not exist 
a woman may have a separate estate which is to be controlled 
and managed according to her direction either because of a 
marriage settlement or by some conveyance to a trustee for 
her use free from any control of her husband. Ordinarily a 
wife's separate property, where the disabilities existed, was 
held and managed by a trustee for her benefit but in modern 
times whatever property a wife may have at the time of her 
marriage remains her own although under modern statutes 
the husband has an interest in the wife's lands in the nature 
of dowe; and she in his under the statutes of dower and dis- 
tribution. Generally a wife is entitled to her own earnings 
as where for example she keeps boarders or engages in busi- 
ness and the creditors of the husband cannot subject such 
property to the payment of the husband's debts. 

In some states a married woman can only sue or be sued 
when joined with her husband but such disability now is gener- 
ally removed and the wife can be sued in the same manner 
as any other person. A husband may be liable for the wrong- 
ful acts of his wife as in case of slander or libel. 

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EVERYDAY LA^ 

In some states, particularly those on the Pacific Coast and 
some of the Southern States, by law. all property acquired 
during marriage by the industry or labor of either husband or 
wife, or both, together with the increase thereof, belongs to both 
during the continuance of the marriage as tenants in common. 
If two persons are married in a state and thereafter remove 
into another state where this law known as " community law" 
is in force, they become subject to the laws of the latter state. 
This community exists unless before marriage the man and 
woman have agreed that it shall not apply. What property 
the husband or wife had before marriage remains his or her 
separate property the right only extending to property ac- 
quired during the marriage. It necessarily follows that both 
must join in the sale of property but each can deal with the 
property owned at the time of the marriage without restraint 
except where the law limits the right. 






96 



CHAPTER XXI. 



INFANTS. 

THE law has fixed the time when boys become men and 
girls become women. Until such age is reached both 
boys and girls are called "infants," afterwards they 
are "adults." In some states the age is the same 
for both sexes, namely twenty-one, while in others females 
reach the age of majority at eighteen. 

The age of majority is attained on the day preceding the 
twenty-first or eighteenth anniversary of the person's birth, 
and the law of the place of the residence of the person de- 
termines his or her rights, but the place where a contract is 
made by a person determines whether the person making such 
contract is an infant. 

Infants have certain privileges and are under certain disa- 
bilites. An infant cannot be prejudiced by lapse of time, 
because he is under disabilities. The object of placing infants 
under such disabilities is to protect them against doing acts 
the full force of which they cannot understand because of 
their inexperience. So an infant cannot make a contract, except 
for his necessaries, that is for food, clothing, schooling and 
such other things as are reasonably necessary for his support, 
taking into consideration his station in life and resources; for 
example, an infant having property amounting to one hundred 
thousand dollars is given greater latitude in purchases than 
one whose resources amount to only a few hundred dollars. 
An infant cannot make an admission to affect his rights. In- 
fants are always objects of peculiar regard by the courts which 
will always interfere for their protection, either in regard to 
their custody or guarding their interests in case of suits against 
them, or by them. The law generally makes provision for 
delinquent and vagrant children by providing industrial schools 
for them, or awarding their custody when the parents are 
unsuitable to a proper society or person. 

Infants have the right to take and hold property, but cannot 
be deprived of it except as provided by law. An infant can 
give a receipt for a legacy, but is not precluded when he 

97 



EVERYDAY LAW 

arrives at maturity from showing that a smaller amount was 
paid to him than he was lawfully entitled to. An infant may 
buy property, but he can repudiate his purchase when he 
arrives at full age; in such case he must return the considera- 
tion that he has received. The acts of an infant are as a rule 
only voidable, that is they are subject to be set aside when 
the infant arrives at full age. An infant can enter into a con- 
tract of marriage. 

An infant, however, may be an agent for an adult or may act 
in certain cases as trustee. He may become a partner, or 
engage in business, but all his contracts are subject to be 
repudiated when he becomes of age, subject of course to the 
rule that if he wishes to disaffirm a contract he must give 
back what he has received under it. 

Most of the litigation over the contracts of infants is in regard 
to what constitute necessaries. This term not only includes 
such things as are required for sustaining life, but also those 
which are suitable and necessary for his proper use, support 
and comfort, considering his condition in life and resources. 
Necessaries include medical attention in case of sickness. 
Where an infant has an allowance from the court, or his 
guardian, of a sum sufficient to supply himself with suitable 
necessaries, he is not liable for necessaries supplied on credit. 
Usually the parent or guardian is liable for the support of his 
child, or ward, and consequently an infant living with his 
parents, or guardian, who supplies him with a home, clothing 
and support, cannot bind himself to a stranger or buy things 
on credit. If, however, an infant is married, his capacity to 
contract for necessaries becomes greater for he will be bound 
for all reasonable necessaries not only for himself but for his 
wife and children as well. 

An infant is liable for crimes committed by him, or wrongs 
done by him. An act done by an individual which results in 
an injury to another, is called a "tort," and an infant is liable 
for all torts done by him, as for example, assault, false repre- 
sentation, fraud or under certain circumstances for acts of 
negligence. An infant, however, will not be liable for either 

98 



INFANTS 

torts or crimes if he is of such tender years as to not be able 
to understand the nature or consequence of his act, as for ex- 
ample, if a boy five years old should in playing with a gun 
accidentally kill someone, or should act so carelessly as to 
cause injury to person or property. It is a question for the 
court and jury to determine whether the infant is of such 
tender years or not. 

An infant can sue or be sued; in the former case he brings 
his suit either by his general guardian appointed by the court, 
or by what is called his "next friend, " that is a person ap- 
pointed by the court to bring a particular suit in his behalf. 
When an infant is sued, if he has no guardian whose duty it 
is to defend the suit, the court will appoint a temporary guard- 
ian to protect his interests and such a person is called a "guard- 
ian ad litem. ,, The usual practice is for some near relative 
to be appointed next friend, or some near friend, or attorney, 
to be appointed guardian ad litem, but the court will always 
itself see that the interests of an infant are properly guarded. 

The father, or in case of his death, the mother, is what is 
termed the "natural guardian" of an infant entitled to his cus- 
tody and charged with the duty of properly caring for him 
and guarding his interests, but if the infant has property in 
his own right it is usual for the court to appoint a guardian 
of the estate, or what is in some states called a "curator," or 
guardian of both person and estate in case the infant is an 
orphan. If the property is derived from the parent, such par- 
ent can be appointed guardian of the estate without bond, but 
usually a guardian, or curator, or as it is called in Louisiana 
the "tutor," is required to give bond. 

A father may under the laws of most states appoint a guardian 
for his infant children by will, but he cannot in that way de- 
prive the mother of her right to the custody of her children 
and if Luch infant has property the guardian must give security 
to the proper court. 

The appointment, duties and liabilities of guardians, curators 
or tutors, is in practically every state prescribed by statute, 
and these statutes provide how and by whom, and under what 

99 



EVERYDAY LAW 

circumstances, a guardian may be appointed, what are his 
duties, how he shall make reports or settlements and account 
for the property entrusted to his care. An infant above the 
age of fourteen can generally select his own guardian, or if one 
has been appointed for him before he has reached that age 
he may upon attaining such age select a new guardian. 

The duties of a guardian of the estate are in a general way 
to return to the court appointing him an inventory of the 
property of the ward, make periodical statements, or settle- 
ments, of his accounts and obtain the authority of the court 
for any unusual payments. Usually the court upon application 
makes an allowance for the support of the infant. When the 
infant attains majority the guardian must make an exhibit 
and settlement of his accounts and file in court the receipt of 
his ward for the property in his charge. In some states the 
ward must appear personally in court to acknowledge satis- 
faction. 

A guardian must have no interests in conflict with those of 
the minor, is bound to exercise the utmost good faith and fair 
dealing, and should strictly follow the requirements of the law 
as to the investment and protection of the ward's estate. A 
guardian is entitled to a reasonable compensation for his 
services, or to the compensation fixed by law. 

If the ward has property in several states there may be a 
home guardianship at the domicile, or home, or residence of 
the minor, and a branch, or what is called * 'ancillary", guard- 
ianship, in other states where the ward has property. "Usually 
the statutes make provisions for the transfer of an infant's 
property from one state to another. These statutes also pro- 
vide how the real estate or personal property of the minor 
shall be managed or sold and for the application of the pro- 
ceeds of such sale. 



100 



CHAPTER XXII. 



INNKEEPERS. 

THE proprietor, or manager of a hotel, or place for the 
entertainment of travelers not disorderly or unfit, who 
are to pay an adequate price for their entertainment is 
in law called an "Innkeeper." An inn, or hotel, is 
a house where a traveler, or transient, is furnished with food 
and lodging as a matter of business and generally is a place 
of entertainment for travelers, or transient guests. An inn- 
keeper holds himself out t3 the world as prepared to enter- 
tain all proper persons who apply for food and lodging. A 
restaurant, or coffee-house, which only undertakes to supply 
food or drink, or a house which only offers to furnish lodging, 
like a lodging house, or an apartment hotel, or a sleeping car, 
is not an inn. An innkeeper and one who operates a boarding 
house are different in that the former holds himself out as 
willing to serve the public while the latter is at liberty to 
choose his guests and make such arrangements with them as 
they may agree upon. 

The state, or city, has a right to regulate inns and houses of 
public entertainment, as well as places where liquor is sold to 
be consumed on the premises, because the public is interested 
in having them properly conducted. All such houses may be 
regulated either b\r statutes passed by the legislature or by 
the municipal assemblies of cities under ordinances. More- 
over, the municipal authorities have power to provide that the 
business of innkeeping shall not be conducted except under a 
license and a penalty can be imposed upon one who operates 
such a house without a license. 

An innkeeper is obliged to receive all travelers who apply for 
entertainment, provided he has room to accommodate them 
and they pay reasonable charges. He has the right to require 
the payment in advance of the price of entertainment. The 
innkeeper must provide suitable accommodations for guests 
and keep on hand food for their consumption. Objectionable 
persons can be excluded and if a guest who has been admitted 
afterwards becomes obnoxious by his own fault or is guilty 

101 



• EVERYDAY LAW 

of improper conduct he may be excluded. The relation of 
host and guest is established by the traveler applying for 
accommodations and having his application" accepted. Gener- 
ally a person who regularly and continuously lives in the hotel 
is not a guest, ' although if he is received as such the hotel 
keeper may be liable to him as a host, but otherwise he is 
only a boarder. A hotel keeper may be liable for the baggage 
of a person if he accepts it for custody, but in such case is 
only bound to exercise such care as an ordinarily prudent 
person would exercise under similar circumstances in the care 
of his own property. 

It is the duty of a hotelkeeper to take reasonable care of his 
guests and protect them from injury or insult, but he is only 
bound to exercise reasonable care and a guest is only entitled 
to reasonable accommodations. The hotelkeeper must protect 
his guest against injury from third persons, or from servants, 
if such injury could have been prevented by ordinary care, 
and a hotelkeeper is liable for injuries to his guests caused by 
defective premises or by bad food. He is also liable for all 
goods of the guest lost in the inn unless such loss is inevitable, 
such as is caused by act of God, such as an earthquake, tor- 
nado or unusual storm, or public enemy, or by fault of the 
owner. A host is liable for the property of his guest which 
is burned by accidental fire or stolen without the fault of the 
owner, or stolen by the servants, and even if the goods are 
destroyed or injured by an unusual storm he is liable if he 
has not taken proper precautions to guard against such disaster. 
Generally, however, statutes exist in most of the states limiting 
the liability of hotelkeepers and if the host has provided a place 
of storage, as a safe, for the care of jewelry, money or valu- 
ables of the guest, he is not liable if such guest refuses to 
avail himself of the facilities so provided. A guest may be 
temporarily absent from the inn and yet the innkeeper is liable 
for the loss of his property, provided the guest had an inten- 
tion to return within a definite or reasonable time, and the 
innkeeper is entitled to compensation during such absence. 

An innkeeper is only entitled to a reasonable compensation 

102 






INNKEEPERS 

for the entertainment of a guest and such compensation can 
be fixed by the innkeeper or may be determined by special 
agreement. Generally the innkeeper has a lien on the goods 
of his guest for the amount of his charges, but generally such 
lien is regulated by statute. 

One who is not a guest of a hotel has usually no legal right 
to enter it or remain in it against the will of the proprietor, 
but a stranger who has business with a guest, if the guest so 
requests, should be admitted, but strangers or visitors for 
social purposes may be excluded. Generally statutes provide 
that acts of fraud on the part of the guest, as an attempt to 
remove baggage without paying charges, or "beating"- a bill, 
is an offense punishable by fine or imprisonment. 



103 



CHAPTER XXIII. 



INSANE PERSONS. 

A PERSON whose mind is either partially impaired, or 
wholly destroyed, is variously called * 'insane,' ' of 
" unsound mind," or "non compos mentis." He may 

be an idiot, or lunatic or only subject to delusions 
Insanity in law means a condition where an individual is de- 
prived of his reasoning ability or of using his mind with an 
understanding of what he is doing. In law all men are presumed 
to be sane and if the contrary is claimed it must be shown, 
but if insanity is once proved it is presumed to continue. 

The law makes provision for the preservation and protection 
of the property of an insane person and for the care and custody 
of his person. If he is incapable of properly protecting him- 
self, or is so mentally deranged as to be violent or dangerous 
he may be confined in an asylum. Generally the law makes 
provision by statute for the protection and care of the property 
of an insane person by providing that when he is found to be 
of unsound mind in a proceeding properly instituted in a court 
having jurisdiction, a guardian may be appointed for him and 
such guardianship may be either of the person or estate or 
both. The duties of such a guardian are defined by law and he 
is required to give bond and to exhibit statements of his 
accounts at periodical intervals and must obtain authority of 
the court for unusual proceedings or investments. The statutes 
regulate the proceedings necessary to have a person declared of 
unsound mind and such insanity must usually be declared by 
finding of a jury. Statutes regulate the powers and duties of 
a guardian and fix the amount of the compensation for his 
his sevices. He is bound to account for all property of his 
ward and if such ward recovers his reason he must make a 
settlement with him and restore what of his property is left. 

A husband is liable for the support of an insane wife, or the 
wife of an insane husband if she has property, and the parent is 
liable for the support of an insane child. If the insane person 
is destitute of means he is usually taken care of at public 
expense in an asylum provided for that purpose. 

104 



INSANE PERSONS 

An insane person may receive and hold property, and if he 

have lucid intervals, make conveyance or sale of the same, 
but all contracts made by a person of unsound mind are sub- 
ject to close scrutiny and the law will not permit him to be 
imposed upon. The estate of an insane person is liable for 
his support. An insane person, or a person of unsound mind, 
may contract for necessaries the same as an infant, that is for 
clothing, food, or lodging. A contract entered into by a person 
who at the time is of such unsound mind as to be incapable of 
understanding what he is doing is sometimes void and always 
voidable, that is it can be set aside upon proper application 
made for the purpose but the consideration received must be 
returned. After a person has been declared insane and a 
guardian appointed he is incapable of making any contract 
and any person who deals with him does so at his peril, but 
one may in good faith deal with an insane person who has 
not been placed under guardianship and if he makes a contract 
with him which is fair and reasonable, such contract will be 
valid and will be upheld. 

An insane person is liable civilly for any wrong that he may 
commit, or for injuries to another caused by his negligence, but 
as an insane person is incapable of criminal intent the damages 
to be recovered will only be allowed to the extent of adequate 
compensation. 

An insane person is not criminally liable if his mind is so 
diseased as to make him incapable of understanding the differ- 
ence between right and wrong, or incapable of understanding 
the nature and effect of the act, and sometimes if a man com- 
mits a crime before he becomes insane he cannot be punished 
unless he recovers his sanity. 

Insane persons may be sued or bring suits in the same 
manner as an infant, that is by next friend, or guardian, and 
if a suit is brought against an insane person the court will 
appoint a temporary guardian to defend the interests of the 
insane person if he have no regularly appointed guardian. 



105 



CHAPTER XXIV. 



INSURANCE. 

A CONTRACT of insurance is one by which a corporation, 
or individual, or association of individuals, called the 
^ "insurer," in consideration of a certain payment, 
called the "premium," agrees to pay to a party, 
called the "insured," a certain sum of money upon the loss, 
or destruction, or injury, of his property or person or in case 
of his death. The writing containing this contract is called 
a "policy." Usually a written application is made for the 
policy and, if referred to therein, forms a part of the contract. 

Insurance in this country is carried on by corporations organ- 
ized for the purpose and, as the business is one in which the 
public has an interest, statutes of most, if. not all, of the states 
provide that such business shall be only carried on by corpora- 
tions which have obtained a license from the state issued by 
an authority called its "Insurance Department." This Insur- 
ance Department exercises a superintending control over the 
companies by frequent examination of their financial condition 
so as to insure their solvency, and the business is largely regu- 
lated by statutes which forbid certain conditions to be inserted 
in the policy and prescribe the rights and liabilities of the 
parties. 

Insurance is based upon the law of averages and is for the 
purpose of apportioning among a class of people, who are sub- 
ject to casualty, the losses of the individuals composing the 
class. For example, experience has demonstrated that if a 
thousand houses, or a thousand manufacturing establishments, 
are insured against loss by fire the losses during any one year 
on an average, will only amount to a certain percentage; so the 
amount of the premium to be paid by persons insuring their 
property to secure this indemnity can be determined by col- 
lecting enough money from the insured to meet the expected 
losses adding an allowance for expenses and possible increase 
in the percentage of loss. If a thousand people insure their 
lives, only a certain number will on an average die during any 
one year, so the amount of premium necessary to be paid by 

106 



INSURANCE 

all persons to meet the losses can be accurately estimated. 
Records of the number of deaths that will occur out of a cer- 
tain number of people each year according to age have been 
kept, and from them have been prepared what are called 
"mortality tables, " showing, out of, say ten thousand children, 
born in any one year, the average number that will die each 
year until the last survivor passes away at perhaps the age of 
one hundred. The business of life insurance is based upon the 
probability of death according to the average percentage shown 
by these tables: that is the premium is according to the risk. 

Originally the only kind of insurance carried on was against 
the perils of the sea, called "marine insurance.' ' Later com- 
panies were organized to insure property against loss by fire. 
Afterwards against loss of life, and during the last fifty years 
companies have been formed to insure against injury or loss 
of life by accident; against loss of time through sickness; against 
defalcation, or theft, or burglary; or loss from the elements, 
such as tornado, or hailstorms. Almost any kind of loss or 
peril can be insured against. 

The contract of insurance is intended to be one of indemnity 

and all forms of insurance, except that of life, are purely 
agreements to indemnify the insured upon the happening of a 
loss to its actual extent. As human life is priceless there is 
no limit to which a man can insure his life. An insurance 
contract is one of chance, that is involving uncertain hazards. 
No one can insure property in which he has no interest, nor 
can he insure the life of another unless he has a reasonable 
expectation of loss because of the death of such insured, or 
advantage from the continuance of the life. From this public 
policy, which forbids gambling contracts, arises what is called 
the law of "insurable interest," that is no person can take out 
a policy of insurance of any kind unless he has an insurable 
interest in the property or life to be insured. 

The subject of insurance, whether property or life, or any- 
thing else, is called the "risk." Policies of insurance are 
personal contracts, especially those insuring against loss or 
damage by fire; therefore a fire insurance policy cannot be 

107 



EVERYDAY LAW 

assigned without the consent of the insurer. In some states 
policies of life insurance are looked upon the same as other 
property and can be assigned in the same way, but in others 
the law forbids the assignment of a life insurance policy to one 
who has no insurable interest to the same extent as it forbids 
the issuance of such a policy in the first instance to one without 
any insurable interest. 

A contract of insurance is one requiring the exercise of the 
utmost good faith on the part of the insured and he is bound to 
make a full and fair disclosure of all circumstances affecting 
the risk when he applies for a policy. 

In many states statutes exist forbidding discrimination on 
the part of insurance companies in the way of giving any one 
person an advantage over others by the way of a decreased pre- 
mium or rebate or special privileges. These statutes also forbid 
combinations on the part of insurance companies by the way of 
agreeing not to charge less than a certain premium. In some 
states the law requires a copy of the application for a life 
insurance policy to be attached to such policy. 

Policies, in case of ambiguity in the language used, are 
construed most favorably in favor of the insured and against 
the insurer, and the written portions of the policy prevail 
over the printed portions. Insurance policies of all kinds 
generally contain, in addition to the requirement of proofs 
of loss, the condition that in case of loss suit must be brought 
within a limited time or the company will not be liable. In 
some states such a requirement is void but in others it is 
held valid and in the latter if loss occurs suit must be brought 
within the period specified in the contract. 






Fire Insurance. 

A policy of fire insurance is one of indemnity only and con- 
tains two classes of agreements; those covering things to be 
done on the part of the insured and those to be performed by 
the company. These agreements may relate to things to be 
done before loss or afterwards. Every person who takes out 
a policy of fire insurance should read it carefully. 

108 



: 



INSURANCE 

The usual stipulations in policies on the part of the company 

cover the agreement to pay a stated sum in case of loss, if 
proper proofs be presented and the conditions of the policy to 
be performed by the insured are complied with. The company 
agrees to only be liable for the actual cash value of the property 
at the time loss occurs and* that actual cash value is to be 
determined with the proper deduction for deterioration. 

The conditions to be complied with by the insured provide 
that the policy shall be void in case the insured has concealed 
or misrepresented any material fact relating to the risk; or if 
the insured shall take out other insurance on the same property 
without the consent of the company; or if the subject of insur- 
ance be a manufacturing establishment and it be operated at 
night, or cease to be operated for a specified time; or if certain 
alterations and repairs be made without the consent of the 
company; or if the interest of the insured be other than uncon- 
ditional and sole ownership; or if it be a building on ground 
not owned by the insured; or if the personal property insured 
be incumbered by a chattel mortgage; or foreclosure proceedings 
be commenced; or if change other than by the death of the 
insured takes place in the interest, title or possession of the 
subject of insurance; or if the policy be assigned before loss; 
or if dangerous explosives be kept on the premises; or if the 
building fall, except as the result of a fire. The company is 
not liable for loss occurring by invasion, insurrection, riot or 
civil war, or if the insured neglect to use reasonable means to 
save and preserve the property at or after a fire, nor is the 
company liable for loss to money, papers, notes or securities, 
curiosities, jewels, pictures, or similar articles unless they be 
distinctly specified in the contract. - The property insured can- 
not be removed to another locality without the consent of the 
company. 

After loss the insured is required to give immediate notice 
of the loss to the company, which means notice within a reason- 
able time under all the circumstances, and furnish proofs of 
loss on forms furnished by the company, giving a list of the 
property destroyed with its value, and such other information 

100 



EVERYDAY LAW 

as is required, and in case of disagreement as to the amount 
of the loss there is a condition that it shall be fixed by appraisers. 

Such conditions are valid and breach of a condition will pre- 
vent recovery in case of loss. 

If the insured be a merchant, he is required to make and 
keep an inventory of the goods covered by the policy, such as 
a stock of merchandise; keep his books of account at night in 
an iron safe; and in case he has other insurance the company 
is only liable for its proportion of the loss. Policies contain the 
condition that there shall be no waiver on the part of the com- 
pany of the conditions of the policy unless such waiver be 
endorsed on the policy by an authorized officer, but in spite 
of this provision the courts hold that by its conduct the 
insurer may waive such condition, or by its conduct misleading 
the insured be what is called * 'estopped,' * that is forbidden 
to claim the benefit of such provision. 

Life Insurance. 

A life insurance policy is usually the result of a written 
application therefor, which must be accepted by the company 
by the issuance of a policy and such policy usually refers to 
the application and makes it a part of the contract. 

The statements in an application are called " warranties' ' or 
"representations," the latter need only be substantially true, 
while all statements, made warranties by the terms of the 
policy, must be literally and exactly true. The statutes of 
many states provide that all statements in the application shall 
be deemed representations and shall not vitiate the policy un- 
less they contribute to the loss. Life insurance policies are 
either whole life, that is payable at death, or "term," that is 
extend over only a certain number of years, or "endowment" 
where the amount is payable at the expiration of a certain 
time, usually ten, fifteen or twenty years, if the insured be 
then living, or if he die before that time, and the premiums 
may be either paid annually, semi-annually or quarterly, or 
the entire premium may be paid in one sum, or for a specified 
number of years. 

110 



INSURANCE 

The theory of regular life insurance is the payment of an 
annuity by the insured commensurate with the risk, which if 
continued until the insured reaches the age of ninety-six or 
one hundred will, with compound interest, amount to enough 
to pay the policy and the expenses meantime of operating the 
business. It will thus be seen that this method of doing busi- 
ness is the reverse of the undertaking for an "annuity" where 
a company, in consideration of the payment of a gross sum, 
agrees to pay a specified annual amount to a • person during 
his life. Excess of premiums in mutual companies is returned 
to the insured in the shape of dividends either annually or at 
the end of a certain period. "Tontine" dividends mean that 
the dividends due a class are put in a fund to accumulate and 
be paid to the survivors at the end of a certain period. 

Life policies sometimes contain a provision against an in- 
crease of the hazard by engaging in a hazardous occupation and 
that they shall be void if the insured shall die because of 
violation of law or commit suicide. In some states the law 
provides that suicide shall be no defense unless the insured 
contemplated suicide at the time the policy was taken out. 

Policies of later days also contain what is called the incon- 
testable clause, which is that after a certain period of time, 
usually one or two years, the policy shall be incontestable 
except for non-payment of premium. This does not forbid, 
however, a company setting up the defense of want of insurable 
interest or the defense that the conditions of the policy as to 
proofs of death have not been complied with. On the death of 
the insured the policy requires that proofs of death be made 
on blank forms furnished by the company, usually consisting 
of the sworn statements of the claimant and the undertaker 
and attending physician and sometimes as to the identity of 
the deceased. These conditions as to proofs of death must 
be complied with before the right of bringing suit arises, if 
no proofs are furnished, or offer to furnish them made, the 
insurer will not be liable. If, however, the company refuses 
to furnish blank forms upon which to make proofs, or disclaims 
any liability, it will be deemed to have waived the condition 
as to proofs. 

Ill 



EVERYDAY LAW 

A person if he pays the premium himself can insure his life 
for any amount and make the policy payable to whomsoever he 
chooses, but no person can insure the Jife of another unless he 
has an insurable interest in such life. A parent has an insurable 
interest in the life of his child, or a husband or wife in the 
life of the other, a creditor in the life of his debtor, or one 
partner in the life of the other. In most states the creditor 
who holds a policy of insurance on the life of his debtor can 
only claim the amount of his debt with interest, together with 
any premiums that he has paid with interest, and the balance 
must be turned over to the estate of the deceased. Insurable 
interest is not created by mere relationship but there must be 
a dependence or reasonable probability of advantage from the 
continuance of the life of the insured or pecuniary loss in case 
of death. 

Payment of premium must be made within the time specified 
by the policy and non-payment of premium will cause forfeiture, 

except when there is a provision, either in the policy or in the 
statutes, that after a certain number of premiums have been 
paid, the policy shall in case of lapse, be extended for such 
time as the reserve on the policy will pay for, which is called 
"extended insurance ;" or the reserve be applied to the purchase 
of what is called "paid up insurance." In the former case the 
policy is extended for its full amount for a limited period, in 
the latter for the term of life although for a smaller amount. 
What is called the reserve on the policy is a certain amount 
reserved or laid aside from the premiums to accumulate at 
compound interest and applied to the payment of the policy 
at its maturity, or in case of reinsurance to pay the considera- 
tion required by the reinsuring company. This provision re- 
quiring a reserve, generally fixed by statute, is to insure the 
solvency of the company because its contracts extend over a 
long period of time. Neither insanity nor sickness is an excuse 
for the non-payment of premiums. If notice of premium be 
required by the terms of the policy, such notice must be given 
and in at least one state, notably New York, life insurance 
companies are required to give at least thirty days notice of 

112 



INSURANCE 

the time fixed for the payment of premium, but this require- 
ment only extends to policies issued in that state. 

In the law of insurance if the insured has concealed any mate- 
rial fact which good faith required him to disclose, and such 
fact be material to the risk, such "concealment," as it is 
termed, will vitiate the policy. 

The business of life insurance is generally carried on by 
what are called "old line" life insurance companies, which 
may be either mutual companies, that is composed of all the 
policyholders, or stock companies, where the corporation has 
a capital stock the same as in other cases. A company may 
be both stock and mutual, that is the profits after a certain 
dividend is paid to the stockholders go to the policy holders. 
Within the last forty years associations have been formed which 
are now known as "Fraternal Beneficiary Associations," having 
lodges, a ritual for the reception of new members, and a repre- 
sentative form of government, that is the representatives 
from the lodges elected by the members form a superior body 
which enacts laws for the government of the association or 
order. These fraternal, or co-operative, associations pay a 
death benefit and the business is practically that of life in- 
surance. These associations have increased to a marvelous 
extent. The policy issued by a fraternal beneficiary association 
is called a "benefit certificate," which generally refers to the 
laws of the Order and the application for membership, all of 
which with the charter of the society constitute the contract. 

These benefit certificates differ from life insurance policies 
in that in the latter the policy contains the entire contract, 
which is between the beneficiary and the corporation, and the 
insured has no right to change his beneficiary unless the power 
to do so is expressly reserved. Whereas, in the former the 
beneficiary society and the member are the parties to the 
contract and the member has no property in the benefit to be 
paid but only the power to appoint a beneficiary, and, as the 
designation of beneficiary is analogous to making a will, he 
can change the beneficiary as often as he wishes by compliance 
with the formalities prescribed by the by-laws for such change. 

113 



EVERYDAY LAW 

As these societies are favored by the state they are usually 
exempted from the insurance laws applicable to regular com- 
panies. The classes of beneficiaries to whom certificates may 
be made payable are usually confined to members of the family, 
blood relatives, or persons dependent upon the members, or 
an affianced husband or affianced wife, and payments of benefits 
cannot be made to persons not included in such classes. 

The premiums on a life insurance policy are usually paid 
quarterly, semi-annually or annually, or for a specified number 
of years, whereas the fraternal beneficiary societies collect 
the premiums, which are called "assessments," usually every 
month; while in a regular life insurance policy non-payment of 
premium does not always work a forfeiture bu 1 :, because of 
the reserve, the insured is entitled to extended or paid-up 
insurance, non-payment of an assessment in a fraternal society 
generally works an absolute forfeiture, subject to the right 
to be reinstated by compliance with the laws of the society 
regulating such reinstatement. 

Accident Insurance, 

A policy of accident insurance undertakes to pay a specified 
amount in case of injury, or loss of life, by accident. In effect 
it is practically a form of life insurance but only in case of 
death from accident. An accident is something which happens 
unexpectedly. It differs from mistake in that the latter sup- 
poses the operation of the will of the agent in producing the 
event, while an accident is an event which happens without 
any direct intention of the person by whose agency it was 
caused. Accident insurance policies limit the insurance to 
injuries received by "external, violent or accidental means," 
with the further provision that the insurance shall not ex- 
tend to any bodily injury of which there shall be no "external 
and visible signs" upon the body of the insured. The further 
provision is usually made that the accident must be the "sole 
and proximate cause" of the injury. 

By external, violent and accidental means is meant that in the 
first place the injury must be the result of accident and also 

114 



INSURANCE 

that there must be involved the element of violence and that 
such violence must come from an external cause. It is not al- 
ways easy to determine exactly what is included in these terms, 
but in the following instances the company was held liable; 
where the insured was lifting a heavy burden in the usual 
course of business and his spine was injured; where the in- 
sured was driving and his horse ran away and he died from 
fright or strain; where a rupture resulted from exercise with 
indian clubs; where tight shoes caused a chafing of the toe 
which resulted in blood poisoning and death; where a man was 
wounded by his cutting a corn also resulting in blood poison- 
ing and death. Spots of blood upon the face and red spots on 
the skin have been held to be external and visible signs. 

The accident must always be what is called the proximate 
and sole cause of the disability or death, as where the insured 
was accidentally shot through the foot which caused lockjaw 
and while suffering from it he cut his throat; and where a man 
fording a river was taken with a fit, fell into the water and 
was drowned. 

A condition usually found in accident policies is that the 
insured must not engage in a more hazardous occupation. A 
mere temporary occupation by the way of diversion, or recrea- 
tion, is not held to be engaging in such occupation; so where a 
farmer is drowned while attempting to save persons from a 
wreck, or a merchant was killed while spending a day hunting; 
it was held that the former was not engaged in the occupation 
of wrecking, nor the latter engaged in the occupation of a 
hunter. 

The company is not liable in cases where the death or injury 
has happened in consequence of "voluntary exposure to unnec- 
essary danger, " or where the risk was obvious, and the insured 
is required to use all "due diligence for personal safety.' * A 
voluntary exposure to unnecessary danger must be wanton, or 
a piece of gross carelessness, as where a man acts so recklessly 
and carelessly that he shows an utter disregard of a known 
danger. There can be no voluntary exposure to unnecessary 
danger if the insured was ignorant of the danger, as where a 

115 



EVERYDAY LAW 

passenger on a railroad train, which had stopped on a bridge 
at night, stepped from the car and fell through a hole in the 
bridge and was drowned; and where a traveler on a train 
arose in his sleep and walked to the rear platform and fell 
off *and was killed, but it is exposure to unnecessary danger 
where a man walks on a railroad track on a dark and rainy 
night at a time when he knew trains are frequently passing. 
The company will generally not be liable if the death be caused 
by taking poison, either accidental or otherwise, as where the 
insured by mistake took a poison instead of his usual medicine. 

The company will not be liable where the injury is caused 
to a traveler by his violating the rules of the company; or in 
case of injuries received while fighting; or while intoxicated; 
or where the insured was violating some law; or where the 
injuries were intentionally inflicted by another person. Where 
the injury was inflicted by an insane person, it was held that 
the exception did not apply because an insane man cannot 
form an intent. 

Accident policies also cover disability, as for example, that a 
specified amount is to be paid in case of a total disability and 
inability to follow his own or some other occupation. Such 
a condition, as all others, must have a reasonable interpretation 
and the courts will be liberal in construing what is meant 
by "total disability, " which of course depends upon the occupa- 
tion of the person injured and the extent and nature of the 
injuries, and will also be liberal in construing what is meant 
by the provisions in regard to loss of eyes or limbs. 

Accident policies also provide that immediate notice of loss 
shall be given and the proofs required by the comapny shall 
be furnished. The word "immediate" means a reasonable time 
under all the circumstances of the case and may be either one 
day or one month. What is a reasonable time depends upon 
all the facts and circumstances of each particular case. Insan- 
ity may excuse the giving of notice. 

Accident policies always provide that they shall not be paya- 
ble in case of injuries intentionally inflicted by the insured or 
any other person or in case of suicide, sane or insane. In some 

116 



INSURANCE 

states it is provided by statute that suicide shall not bar 
recovery unless the insured had the intent to commit suicide 
at the time the policy was taken out, and recovery has been 
allowed on an accident policy in case of suicide because of the 
peculiar wording of the statute. A person may be so far in- 
sane as to not understand the nature or consequence of his 
act and be incapable of forming an intent to take his own life, 
in such cases suicide is an accident. 

Miscellaneous forms of Insurance. 

Other forms of insurance are quite common at the present 
time, such as " Casualty,* ' or insurance against injuries caused 
to another by negligence or accident; "Credit," as where 
credits are insured; "Fidelity," as where the fidelity of em- 
ployees is insured; "Plate Glass," where plate glass is insured 
against breakage or loss by fire; "Theft" or "Burglary," as 
where property is insured against loss by theft or burglary; 
"Title," where the title to real estate is insured; and insurance 
against loss from storms, cyclones, hail; or where live stock 
is insured against death. The contracts covering these forms 
of insurance contain many conditions which if reasonable will 
be upheld by the courts and in case of loss all acts which 
are to be performed by the insured, such as for instance 
furnishing proofs of loss must be complied with. 



117 



CHAPTER XXV. 



INTEREST AND USURY. 

INTEREST is a percentage or compensation allowed by law, 
or fixed by the parties, for the use of money, or allowed 
by law for the wrongful withholding of money after the 
time at which it should have been paid. Interest is either 
"simple," that is calculated on the principal for a specified 
time, or "compound," which is interest on interest, that is 
at periodic intervals the interest is added to the principal and 
interest again calculated on such increased sum. "Legal inter- 
est" is the rate prescribed by law if no agreement is made for 
any other rate, in which case it will be presumed that the 
parties intended that legal interest should be paid. This is 
the rate to be paid on judgments and overdue accounts. The 
term "lawful interest" means such rate of interest as the 
parties to a contract may agree upon; thus, where no rate is 
specified, the legal rate of interest in many states is five, 
six or seven per cent, as the case may be; while the parties 
are allowed by special arrangement to agree upon a greater 
rate of say, perhaps ten or twelve per cent. The law allows 
interest by way of a compensation for the detaining of money 
after it becomes due, or permits persons loaning or hiring 
money to collect compensation for its use. Sometimes interest 
is allowed as damages. 

Interest on a note runs from the time when it becomes due 
or payable, or from its date as may be agreed, or in case of a 
debt from the time at which it became due and should be paid. 
Parties by agreement can fix not only the rate of interest 
within the limit fixed by law, but also the time when interest 
is to begin. Where money is to be paid on a day certain, or 
a debt is payable at a specified time, if payment is not made 
then the law implies a contract on the part of the debtor to 
pay the legal rate of interest until such debt is paid. 

The taking of more than the lawful rate of interest is called 
"usury." From the earliest times those who had money to 
loan always endeavored to obtain the highest possible rate of 
interest for its use. In many cases lenders took advantage of 

118 



INTEREST AND USURY 

the necessities of the borrower to extort an excessive and un- 
reasonable rate of interest. The term "usurer" has always 
been one of reproach and in nearly all states statutes have been 
enacted fixing the legal rate of interest and the rate which 
may be charged by a lender by special agreement, and penal- 
ties are imposed for exacting more than the lawful rate of 
interest. 

The Court will always look into all the circumstances of the 
case to determine whether usury has been exacted and will 
closely scrutinize the transaction to see if certain payments 
made by the borrower, under the guise of commissions and 
expenses, constitute in realty the exaction of usury. The 
courts will disregard the form of a transaction and will always 
look to its substance to determine whether or not the trans- 
action is tainted with usury. 

In some states the exaction of usury is punished by a forfeit- 
ure of all interest, in others the debt is made void, in others 
the exacting of usury is an offense punishable by fine or im- 
prisonment. 

The right of a borrower to set up usury as a defense in an 
action to recover the debt is personal, that is it can only be 
claimed by the debtor unless the transaction is made void by 
statute in which case such defense can be set up by his personal 
representatives or persons affected by or interested in such 
transaction. 



119 



CHAPTER XXVI. 



LANDLORD AND TENANT. 

THE relation of landlord and tenant is that which exists 
between two parties for the occupation, or possession, 
of lands, or tenements, by one in consideration of a 
certain rent to be paid therefor to the other. Tenements 
mean usually houses, rooms, buildings or something that can 
be held or used. The party owning or controlling such lands 
or tenements is called the "landlord.* ' The party to whom 
the occupation is given is called the "tenant." The contract 
which specifies the terms upon which such lands or tenements 
are to be occupied is called a "lease." The landlord in the 
the lease is often called the "lessor,, and the tenant the "les- 
see." To create the relation of landlord and tenant there must 
either be an express, or implied, valid contract and such validity 
is determined by the same principles which govern other con- 
tracts. The consideration of the lease is called "rent," although 
a valid lease may be made without any reservation of rent. 
A lease may be made of any property, such as houses or lands, 
but a lease of personal property is called a "bailment." An 
agent placed in possession of the premises by the owner for 
its management is not a tenant, nor is a lodger, nor one who 
rents a room or several rooms in a house. In the latter case 
the party in possession of the house retains the possession and 
custody of the same but only permits the temporary occupa- 
tion of part of the premises by a lodger. 

A tenancy may be either express, as where a lease is made, 
or implied, as when a person occupies premises with the per- 
mission of the owner in which case there is an implied con- 
tract on the part of the tenant to pay rent, and if no rent is 
agreed upon a reasonable rent. 

A lease may be made verbally but, under the statutes of most 
if not all the states, a lease for a longer period than one year 
must be in writing. No particular words are necessary in 
order to create a lease, but it must appear that the intention 
of one party was to permit the other to enter and occupy the 
premises pursuant to the agreement and on the other to occupy 

120 



LANDLORD AND TENANT 

the premises and pay rent. No particular form is essential to 
the validity of a lease. It is enough if the writing describe the 
premises and specify the period of duration of the lease, or for 
what length of time the lease is made, and the amount of the 
rent to be paid and how and when it is to be paid. If an 
agent executes a lease his authority generally must be in 
writing. If formalities are prescribed by statute for the exe- 
cution of leases they must be substantially followed, and if 
an acknowledgment before a notary public or other similar 
officer is required, it is necessary that the lease be so acknowl- 
edged. A lease is construed the same as all other contracts, 
that is the intent of the parties must be looked for and words 
construed in their ordinary meaning. 

Generally a lease is made by the owner of the property, but 

the relation of landlord and ;enant does not depend upon the 
title of the landlord because if a tenant accepts a lease he 
cannot deny the title of his landlord. The purchaser of land 
takes it subject to a lease because every purchaser of land is 
bound to examine the property, and if it is occupied by some 
one learn what the claims or rights of such occupant are 
before he purchases the land. The original lessor remains 
liable on all his agreements contained in the lease even though 
he may have sold the premises or assigned his interest in the 
lease, and the original lessee remains liable on his covenants to 
pay the rent although he may have sublet the premises to 
another party. It is the duty of the tenant to use the property 
so as not to injure it unnecessarily, but he is not liable for 
ordinary wear or tear nor is he liable for injury to, or destruc- 
tion of, the premises by fire not caused by his own negligence. 
A tenant is liable for the acts of hrs servants and business 
associates. 

Although the tenant cannot deny his landlord's title he may 
show that he has acquired such title by purchase. He cannot 
acquire a title as against his landlord by a purchase at a tax 
sale, where it was his duty to pay the taxes, nor can he pur- 
chase a mortgage on the premises and claim under it before he 
has surrendered the possession. Neither can a tenant make 

121 



EVERYDAY LAW 

an admission of the title of a stranger, which is called an 
1 'attornment.' ' 

Leases may be made for any length of time, but a valid lease 
cannot be made for a longer period than one year unless it is 
in writing. Both parties are bound by the agreements con- 
tained in the lease as to the use to which the premises are to 
be put and a tenant cannot sublet without the consent of his 
landlord if the lease so provides. The landlord is not bound to 
repair the leased premises and the tenant may be liable for 
rent although the premises have been destroyed by fire, but 
usually there is a provision in the lease that the destruction 
of the premises by fire shall terminate it. Where the lease 
is for no specified time it is called a "tenancy from year to 
year," "or month to month, " according as the rent is to be 
paid. If a monthly rent is reserved the tenancy is from 
month to month, if a yearly rent is reserved it is from year 
to year, and a lease for no definite term with an annual rent 
is a lease from year to year. If the tenant, after the expira- 
tion of a lease for a given period, holds over, or retains posses- 
sion, he is regarded as a tenant from year to year, or month 
to month according as the rent was payable under the lease, 
or at the election of the lessor he may be evicted. 

A tenancy from month to month is practically a lease at will, 
that is it may be terminated by a notice from either party of 
an intention to quit or end the tenantcy. If a tenant is occu- 
pying premises from month to month if he intends to move 
he must give a month's notice to his landlord, and on the other 
hand if the landlord wishes to terminate the lease he must 
give a month's notice to the tenant. 

Where real estate is occupied without any reservation of 
rent, or agreement for its payment, or without any time speci- 
fied for the occupation, it is a tenancy at "will" or at "suffer- 
ance," and may be terminated by the landlord at will although 
reasonable or legal notice of an intention to terminate it must 
be given. 

The lease of a building is a lease of the land upon which 
it stands. The lease of a part of a building passes with it as 

122 



LANDLORD AND TENANT 

incident thereto whatever is necessary to be used with or 
required for the reasonable enjoyment of such portion. Under 
a lease of a building everything passes which belongs to it or 
is used with it. There is no rule which requires the premises 
to be in a tenantable condition, but there is an implied obliga- 
tion on the part of the lessor that the premises shall be ready 
for occupancy at the commencement of the term, and if the 
landlord conceals defects in the premises which the tenant 
could not have discovered by reasonable diligence, it is such 
fraud as avoid the lease and the tenant can remove from the 
premises and recover any rent that has been paid in advance 
and damages for the loss occasioned by such removal. Unless 
it is so expressly agreed there is no implied covenant on the 
part of the lessor that the leased premises are suitable or fit for 
the particular use for which they were intended by the lessee. 
It is a general rule that the use of the word "lease," in an 
instrument of lease implies an agreement on the part of the 
landlord that he will do nothing to disturb the quiet enjoyment 
of the premises by the tenant and if the landlord by his con- 
duct makes such quiet enjoyment of the premises by the 
tenant impossible, such tenant may remove from the premises 
and is excused from the performance of the covenants of the 
lease. This is called an "eviction." If the landlord creates a 
nuisance by which the tenant cannot enjoy the reasonable use 
of the leased premises, he may give up such possession and 
abandon the premises. 

The crop raised on the leased premises, as in case of a farm, 
belongs to the tenant, but a tenant may lose the right to the 
crops by a forfeiture of the lease or surrender of the possession. 
The right of a tenant to crops depend practically upon the 
conditions of the lease and no inflexible rule in regard thereto 
can be laid down. 

A tenant may become liable to third persons for injuries re- 
ceived because of a failure to keep the premises in a reasonably 
safe condition, but where the injuries to such third person are 
due to the faulty or defective construction of the premises, or 
because of a continuing nuisance therein, or where the landlord 

123 



EVERYDAY LAW 



retains control over the premises or part where the injury- 
occurred, such as a passageway or elevator the landlord is 
liable for such injury. A tenant is obliged to pay rent at the 
rate agreed upon in the lease, or, if he is a tenant at will, or 
by sufferance, he is obliged to pay a reasonable rent. The tenant 
may be liable for rent, although he does not actually occupy 
the premises, as when he has the right to occupy them, or has 
sublet the premises to another who has moved out. 

Where there is no fraud or misrepresentation, the landlord 
does not warrant that the premises are fit for occupation, unless 
he has expressly agreed that they are, and if the premises 
become untenantable the tenant is not released from his duty 
to pay rent, unless it is so stipulated in the lease, nor can he 
abandon the premises and avoid payment of rent on the ground 
that the plumbing is defective so that the house is full of sewer 
gas unless some agreement in the lease provides for such a 
termination of the tenancy, or unless the landlord has con- 
cealed from the tenant the true condition of the premises which 
the tenant was not able to discover by a reasonable inspection. 
The same rule applies where the occupation of the house be- 
comes dangerous from an infectious disease or from lack of 
repairs. The tenant may be liable for double rent as where he 
refuses to give up possession after the expiration of his lease. 

In some states the furniture or other property of the tenant 
on the premises is subject to a lien of the landlord for the rent, 
that is the landlord can seize such property by proper pro- 
ceeding and have it sold to satisfy the rent. 

A tenancy may be terminated by the expiration of the lease 
in which case the tenant is not entitled to any notice; if he 
holds over after the term he may be liable for double rent; 
but where the premises are held on a lease from month to 
month, or year to year, a notice to quit must be given before 
the tenancy can be terminated. Notice to quit may be given 
either by the tenant or by the landlord entitled to possession 
and the service of a notice to quit must usually be made on 
the tenant or landlord personally, or it may be served upon 
someone whose duty it is to give it to the tenant or landlord, 

124 



LANDLORD AND TENANT 

as a member of his family over fifteen or sixteen years or an 
agent. 

A tenant refusing to give up possession of the premises after 
his term has expired may be liable to a summary action brought 
by the landlord to recover possession called * 'forcible entry and 
detainer." The statutes of nearly every state provide sum- 
mary and speedy methods for the recovery of possession of 
real estate by a party entitled thereto. The parties may 
agree upon the method for the termination of a tenancy and 
in such case the formalities specified must be observed. 



125 



CHAPTER XXVII. 



LIENS. 



ALIEN is the right of a person having possession of the 
property of another to retain it until some charge upon 
it, or some demand due him, is satisfied. It is the 

right to enforce a charge upon a specific thing by 
withholding possession from the owner until the charge is 
paid. It is also the right of a creditor to have a debt or 
charge satisfied by legal proceedings out of specific property, 
or its proceeds if sold, irrespective of having possession. In 
other words a lien is a preferred claim against certain property, 
or a charge by way of security against it, and for the satis- 
faction of which claim the property may be sold with or with- 
out legal proceedings according to the nature of the right. 
Thus a pawnbroker has a lien on goods pawned, which he may 
enforce by sale of the property without legal proceedings; a 
bank has a lien on stocks or other securities pledged to it; 
a common carrier has a lien for his charges on the goods 
carried; a corporation may have a lien on its stock for a debt 
due it from a stockholder, which lien may be enforced by sale 
of the property. There are other liens, the right to which 
exist by statute, such as a lien of a mechanic for work done 
on a building, or a material man for materials furnished for 
its erection, or a contractor for the price of the erection of 
the building. Such liens must be enforced by legal proceedings. 

A lien can only be created with the consent of the owner under 
a contract express or implied with such owner, or even without 
his consent because of some statute. All kinds of property are 
subject to liens, although formerly liens existed only against 
personal property or chattels. The foundation of a lien is 
possession by the one entitled to it. As for example, if a wagon 
is taken to a shop of a mechanic for repairs the mechanic will 
have a lien on the wagon for his charges and he can refuse 
to give up the property until the debt is paid. 

There are certain liens created by law as well as by contract. 

For example a contractor for the erection of a building, as 
well as those who furnished material for its construction, or 

126 



LIENS 

laborers engaged thereon, are entitled by statute to a lien on 
the building for the contract price in the one case, for the 
materials in the other, or for wages in the last mentioned 
instance. In order to obtain the benefit of the mechanics lien 
law, the requirements of the statute creating it must be complied 
with. Generally it is necessary that a claim or statement of 
the account be filed with the clerk of the court; that notice 
be given to the owner and that suit be brought on the claim, 
and all these acts must be done within the time and in the 
manner required by statute, when, in the proper proceeding 
in the proper court, judgment will be entered that the property 
be sold to satisfy the claim and the costs of the proceeding. 

The seller of an article or of land may have what is called a 
"vendor's lien," but if the possession or title to the property 
has passed it cannot be enforced as against innocent purchasers, 
or those who have in good faith acquired a claim against the 
property without notice, and a vendor's lien must usually be 
enforced by obtaining a judgment against the debtor, in which 
case the property can be levied on and no exemption of such 
property against the execution can be claimed. 

When a man pledges personal property to a pawnbroker, or 
to a bank, for a loan, the lender is given possession of the 
property and may retain it as against the owner until the 
debt is paid, or if the debt be not paid when due, he may 
sell the property, sometimes without notice to the owner but 
more often it is required by law that he publish a notice of 
the sale and sell it at public auction. If there is no require- 
ment of law for such a notice, and the contract under which 
the loan is made provides that in case of default the property 
may be sold at either public or private sale without notice, 
such a provision is binding and will authorize a private sale 
of the property pledged. But in such case the seller must 
use. reasonable effort to obtain the market, or a fair, price. 

A lien may be created by rendition of a judgment against a 
debtor. In some states when a judgment is rendered it creates 
a lien against all of the real estate of the judgment debtor 
without the levy of an execution. In some states the rendition 

127 



EVERYDAY LAW 

of a judgment in a justice court creates a lien on the personal 
property of the debtor. Such lien is enforced by a levy under 
execution, 

A lien may be created under attachment proceedings, as where 
property is seized for a debt under process issued by a court 
when the debtor has either fraudulently incurred the debt or 
is about to remove his property with intent to defraud his 
creditors, or for other reasons specified by law. 

A hotelkeeper or innkeeper has a lien on the baggage of his 
guest for his charges. A stable man has a lien on the horses 
entrusted to his keeping for his charges for care furnished and 
food supplied. The boarding house keeper is often given by 
statute a lien for his charges. Statutes generally provide how 
such liens may be enforced, that is under what conditions a 
sale may be had of the property to pay the debt. 



121 



CHAPTER XXVIII. 



MORTGAGES. 

MORTGAGE is the name given to an instrument by 
which either real estate or personal property is pledged 
to another for a loan of money, or as security for the 
performance of some obligation. The party making 
the mortgage is called the "mortgagor," the one to whom it 
is given is called the "mortgagee." A mortgage of land is 
generally an absolute conveyance by the mortgagor to the 
mortgagee to become void if the obligation is performed or 
the debt is paid. Sometimes the mortgage is in the nature of 
a trust deed, that is the property is deeded to someone in trust 
to be sold by him if the debt is not paid either in the manner 
provided in such deed or by virtue of a legal proceeding in 
court. When personal property is mortgaged the instrument is 
called a "chattel mortgage." 

It is not necessary in order to create a mortgage for any par- 
ticular form of words to be used as any instrument whereby 
an intent appears to convey the land as security for a debt, 
or to create a lien thereon, will amount in law to a mortgage, 
and even an absolute deed of the entire interest in property 
may, in a proper proceeding in court, be shown to be a mort- 
gage and the owner upon payment of the debt be entitled to 
have the property reconveyed to him. 

No instrument can be construed to be a mortgage in which 
the mortgagee does not have the right to foreclose, that is to 
sell the property conveyed if the debt be not paid, or the 
duty specified therein be not performed, and the reciprocal 
right on the part of the mortgagor to have the property recon- 
veyed to him if he does perform the duty or pay the debt. 
There is a rule of law to the effect that if an instrument is 
once shown to be a mortgage it never becomes anything else 
and the right of the mortgagee to redeem will continue until 
such right is cut off by forclosure of the mortgage or the prop- 
erty is redeemed. 

The validity of a mortgage is determined by the law of the 
place where the property is situated, even though it is executed 

129 



EVERYDAY LAW 

in another state where the parties reside. Generally, while a 
mortgage is valid as between the parties without being re- 
corded where the land or other property covered by it is 
situated, yet an unrecorded mortgage will not be upheld as 
against any party who in good faith has bought the land 
without notice of the mortgage, or as against a creditor who 
may have levied an execution on the land. It follows that 
every instrument in the nature of a mortgage whether called 
such, or a deed of trust, should be recorded as soon as ex- 
ecuted. The statutes of every state generally provide how a 
mortgage of real estate should be executed, that is the parties 
making it should appear before a certain officer, as a notary 
public, or a clerk of court, and execute before him what is 
called an "acknowledgment," that is such officer must certify 
that on a certain day the parties named in and who executed 
the mortgage, known to him to be such, appeared before him 
and acknowledged the instrument to be their free act and 
deed, or that they executed the same freely. This certificate, 
attached to the instrument which is signed by the .parties, 
entitles it to be recorded. The same rules in regard to mort- 
gages of personal property exist in some states. The same 
mortgage may cover both real and personal estate and all 
property which is assignable, or the subject of a contract, 
may be mortgaged, that is the mortgagee will acquire a lien 
on whatever interest the mortgagor has in such property. 

The mortgagor must always be a party capable in law of making 
a contract, that is a minor cannot mortgage land or personal 
property, neither can one who has been declared insane, and 
in order for a party to give a valid mortgage, he must also 
have some title to or interest in the property. A mortgage 
can be executed by an agent, if the authority to such agent, 
or a power of attorney to him, be in writing and such writing 
must be recorded with the mortgage. In case a power of 
attorney is executed the agent is called an "attorney in fact." 

There must always be a consideration for a mortgage, because 
if there is no debt, or obligation to be performed, no considera- 
tion exists for the mortgagee and it may be set aside in a 

130 



MORTGAGES 

proper proceeding for the purpose brought by some creditor 
or by the mortgagor himself. If the mortgage be given for 
an illegal consideration, that is to secure a gambling debt, or 
to secure a debt which could not be enforced at law, it is in 
some cases absolutely void, or under other circumstances it 
is voidable only and may be cancelled by a suit at law accord- 
ing to the nature of the consideration. 

A mortgage may be given for an existing debt or to secure 
future advances. It may be partly void, that is it may stand 
as security for a debt actually due, and be unenforcible as to 
an illegal debt, or future advances when mortgages under a 
statute given for future advances are declared invalid. 

While no particular form is necessary to constitute a mortgage 
of land it is necessary that a plain intent should appear to 
charge the land, or property, with a lien to secure the pay- 
ment of a debt or performance of an obligation, and the nature 
of the debt or obligation; and the time when it is to be paid, 
or the time when the obligation is to be performed must be 
set forth with reasonable particularity. Where an instrument 
is so uncertain that no one can tell what it means it may be 
held to be worthless and void. The property must be described 
with reasonable certainty so that it can be identified, because, 
although the mortgage may be perfectly good in other respects, 
yet if the description of the property is so uncertain that no 
one can understand where it is, or identify it, the mortgage 
is of no value and may be held void. 

A mortgage creates a lien on the property described therein 
to the extent of the interest of the mortgagee, subject to all 
existing rights, liens and encumbrances of third parties. A 
mortgage, if not recorded soon enough may become a second 
lien because an instrument executed later was placed on record 
first. There must always be a delivery of the mortgage. A 
mortgage sometimes may cover property which the mortgagor 
does not own but afterwards acquires. A mortgage of land 
carries with it the buildings on the property, or other improve- 
ments, and such machinery or articles in the building which 

131 



EVERYDAY LAW 

are attached to it and form part of it. Such articles are 
called "fixtures," as mantelpieces in a house. 
Mortgages may be assigned and transferred as other property. 

If the law requires an assignment of a mortgage to be recorded 
the law must be complied with, but usually a mortgage passes 
by delivery, or assignment, in any manner whereby an intent 
to transfer ownership appears. 

When the debt secured by the mortgage is paid, or the 
duty to secure performance of which the mortgage is given, 
is performed, it is the duty of the mortgagor to execute a proper 
release or satisfaction of the mortgage and deliver it to the 
mortgagor. The mortgagee can also release part of the land 
mortgaged, retaining the lien on the remainder of the property. 
Payment of the debt always entitles the mortgagor to a re- 
conveyance of the property. The mortgagee is liable for 
damages caused by a refusal to execute a release, or satisfac- 
tion, of the mortgage after it is paid. 

If a mortgage be not paid, although it may be an absolute 
conveyance on its face, the right of the mortgagor to redeem 
the land, or pay the debt secured by the mortgagage, must be 
foreclosed or cut off by foreclosure proceedings in order to 
terminate his right. Sometimes the mortgage itself provides 
how the land may be sold in case of a breach of condition, but 
generally the method by which mortgages and deeds of trust 
may be foreclosed is prescribed by statutes. In some states 
the mortgagee in case of default is entitled to advertise and 
sell the property at auction, and after such sale the purchaser 
acquires the interest conveyed by the mortgage. The mort- 
gagee can also bring what is called a "foreclosure suit" in a 
court, asking to have the property sold for the payment of the 
debt by the sheriff, or someone appointed by the court, for 
the purpose of making the sale. In most states the mortgagee 
can select any one of the remedies provided by statute he may 
prefer, that is either forclosure by an advertisement in a news- 
paper or a proper suit. In case he elects to foreclose by ad- 
vertisement, in order to make a valid sale and cut off the 
rights of the mortgagor, all the requirements of the statute 

132 






MORTGAGES 

must be performed, that is if the statute says that the adver- 
tisement shall be published for twenty-one days, the sale will 
be void if the advertisement is only published for twenty 
days. The advertisement must be in a newspaper published 
in the county where the land is situated. 

Sometimes after foreclosure sale the mortgagor has a certain 
time within which he can redeem, that is if he comes in within 
the specified time and pays the debt and the costs and ex- 
penses, he entitled to have the property conveyed back to him. 
This right, which is called "equity of redemption, " is usually 
conferred by statute. 



133 



CHAPTER XXIX. 



NEGOTIABLE INSTRUMENTS— COMMERCIAL PAPER, 
NOTES, DRAFTS AND CHECKS. 

THE word, * 'negotiable,' ' means capable of being trans- 
ferred by assignment, sale, indorsement, or delivery. 
An instrument to be negotiable must have the following 
characteristics: it must be in writing and signed by 
the maker or drawer; must contain an unconditional promise, 
or order, to pay a sum certain in money; it must be payable on 
demand, or at a fixed and determinable future date; it must 
be payable to order or to bearer, and, if it is addressed to a 
drawee, he must be named, or otherwise indicated therein with 
reasonable certainty. 

The sum payable is certain, although it is to be paid with 
interest or in stated installments, or by stated installments 
with the provision that upon default in payment of an install- 
ment, or of interest, the whole shall become due; or with 
exchange, either at a fixed rate or the current rate, or with 
costs of collection, or an attorney's fee in case payment shall 
not be made at maturity. 

An unconditional order, or promise, to pay may be coupled with 
an indication of a particular fund out of which reimbursements 
are to be made; or a particular account to be charged with the 
amount; or a statement of the transaction, which gives rise to 
the instrument. An order, or promise, to pay out of a particular 
fund is not unconditional. 

An instrument is payable at a determinable future time, which 
is expressed to be payable at a fixed period after date, or 
on or before a fixed or determinable time specified therein, 
or on or at a fixed period after the occurrence of a 
specified event, which is certain to happen though 
the time of happening be uncertain, as upon the death 
of a person. An instrument payable on a contingency, 
as if Smith outlive Jones, is not negotiable and the happening 
of the event does not cure the defect. 

An instrument which contains an order, or promise, to do 
any act in addition to the payment of money, is not negotiable 

134 



NEGOTIABLE INSTRUMENTS, ETC. 

although the character of an instrument otherwise negotiable 
is not affected by a provision which authorizes the sale of 
collateral securities pledged for payment, in case the instru- 
ment be not paid at maturity, or authorizes a confession of 
judgment if the instrument be not paid at maturity, or waives 
the benefit of any law intended for the advantage, or protec- 
tion, of the obligor, or gives the holder the right to require 
something to be done in lieu of payment of money. 

The validity or negotiable character of an instrument is not 
affected by the fact that it is not dated; or does not specify 
any value given; or that value has been given therefor; or 
specify the place where it is drawn, or where it is payable, 
or bears a seal or designates a particular kind of current money 
in which payment is to be made. 

An instrument is payable "on demand" where it so states. 

Where an instrument is issued, accepted, or indorsed, when 
overdue it is as regards the person issuing, accepting or en- 
dorsing it payable on demand. The instrument is payable "to 
order" when it is drawn payable to the order of a specified per- 
son, or to his own order, and it may be drawn payable to a 
third party, or the drawer, or maker, himself, or the drawee, 
or to two or more persons jointly, or to one or some of the 
several parties, or the holder of an office for the time being. 
Where the instrument is payable to order, the payee must be 
named, or otherwise indicated with reasonable certainty. The 
instrument is payable "to bearer" when so stated on its face, 
or to a person named therein as bearer, or when it is payable 
to the order of a fictitious person and such fact was known to 
the person making it, or when the name of the payee does 
not purport to be the name of any person, or when the only or 
last indorsement is what is called an "unrestricted indorse- 
ment," that is where the payee simply writes his name on the 
back of the instrument. 

The instrument is not invalid for the reason only that it is 
ante-dated, or post-dated. Usually where an instrument that is 
payable at a fixed period after date is issued undated, or where 
the acceptance of an instrument payable at a fixed period after 

135 



EVERYDAY LAW 

sight is uncertain, any holder may insert therein the true date 
of issuance, or acceptance. Insertion of a wrong date does 
not avoid the instrument in the hands of a subsequent holder 
in due course of business, but as to him the date so inserted is 
to be regarded as the true date. 

Where there are blanks left in a particular printed or written 
form, or where an instrument issued is on a blank piece of paper 
and signed, but the form not filled up, the person in possession 
thereof ordinarily has authority to complete it by filling up 
the blanks or can fill up the blank paper so as to make it a 
negotiable instrument. 

While an instrument may not be negotiable by law it may 
still be assigned but the assignee takes it subject to any de- 
fense the maker may have, while in the case of negotiable 
instruments the assignee takes them, if bought before maturity, 
free from such defense. 

The law of negotiable instruments arose from what is called 
the "law merchant,' ' that is from the customs and -methods of 
doing business of merchants and traders, and the statutes and 
rules of construction adopted by courts practically give effect 
to the customs and usuages which have grown up among mer- 
chants and traders in regard thereto. Negotiable instruments 
may be promissory notes, bonds issued by municipalities, such 
as cities, counties, school districts or states, or business cor- 
porations, such as railroad and telegraph companies, checks 
and drafts. The usual name in law for a draft is a "bill of 
exchange.' y 

A negotiable instrument is incomplete until its delivery, but 
when once delivered it passes out of the control of the maker. 
Where the language of the instrument is ambiguous, or there 
are omissions, the following rules apply: if the sum payable is 
expressed in words and in figures and there is a discrepancy 
between the two, the sum denoted by the words is payable; 
but if the words are ambiguous and uncertain, reference may 
be had to the figures to fix the amount; if the instrument pro- 
vides for the payment of interest without specilying the date 
from which interest is to run, it runs from the date of the 

136 



NEGOTIABLE INSTRUMENTS, ETC. 

instrument and if the instrument is undated from the issuance 
thereof; if no rate of interest is specified it bears interest at 
the legal rate; where there is a conflict between the written 
and printed provisions of the instrument, the written provisions 
prevail; where the instrument is so ambiguous that there is 
doubt whether it is a bill or note, the holder may treat it as 
either; where a signature is so placed upon the instrument that 
it is not clear in what capacity the person making it intended 
to sign, it is to be taken as an indorsement and where the 
instrument is signed by two or more persons they are liable 
jointly and severally, that is both or either of them are liable. 
If the agent indicates in signing that he signs for his principal, 
as for example, signs a note "John Smith, By Peter Jones, 
Agent," the agent is not personally liable. Forged signatures 
have no force or effect. 

Every negotiable instrument is deemed to have been issued 
for a valuable consideration and that every person whose signa- 
ture appears thereon has become a party for value. Value is 
any consideration sufficient to support a simple contract. 
Absence or failure of consideration is a defense on a negotiable 
instrument as against the original payee, or any person taking 
it after maturity. An accommodation party to a negotiable in- 
strument is one who has signed it or indorsed it without 
receiving any value therefor for the purpose of loaning the 
credit of his name to some other person. An accommodation 
maker, or indorser, is liable on the instrument to anyone who 
has taken the same in good faith before maturity. An instru- 
ment is negotiated when it is transferred from one person to 
another, if payable to bearer by delivery, if payable to order 
by indorsement of the payee and delivery. 

A blank indorsement is where the payee simply writes his 
name on the back of the instrument, or on a paper attached 
thereto. It is restricted when it is made by indorsement 
payable to a certain party, or the indorsement may be quali- 
fied as when the instrument is indorsed "for collection,' * and 
the indorser may shield himself from liability by adding 
before his signature the words " without recourse." If the in- 

137 



EVERYDAY LAW 

strument is payable to two or more parties, all must indorse 
unless one has authority to indorse for the others. If the name 
of a payee is wrongly spelled, he should indorse the name as 
incorrectly spelled and then write his name correctly right 
below it. 

The holder of a note may strike out any indorsement which 
is not necessary to his title and the indorser whose name is 
stricken out, and all indorsers subsequent to him, are thereby 
relieved from liability. A negotiable instrument may be trans- 
ferred for value without indorsing it, but the transfer only 
gives such title as the person who transferred it had. 

A holder in due course is one who has taken the instrument 
under the following conditions: that it is complete and regular 
upon its face; that he became the holder of it before it was 
overdue and without notice that it had been previously dis- 
honored if such was the fact; that he took it in good faith and 
for value and at the time he so took it had no notice of any 
defect in the title of the person negotiating it, or any infirmity 
in the instrument. A holder in due course holds the instru- 
ment free from any defect of title of parties who held it before 
and may enforce payment for its full amount. A non-negotiable 
instrument, or one taken after maturity, is subject to all the 
defenses that existed between the original maker and the payee. 

A person drawing a negotiable instrument by doing so admits 
the existence of the payee and that he is one who has capacity 
to indorse and engages that on due presentment the instru- 
ment will be accepted or paid and that if it be dishonored, 
and the necessary proceedings on dishonor taken, he will pay 
the amount to the holder, or to any subsequent indorser who 
may be compelled to pay it. A person who accepts the instru- 
ment, such as a draft, engages to pay it and admits the exis- 
tence of the drawer, the genuineness of his signature, and his 
capacity and authority to draw it, and the existence of the 
payee and his capacity to indorse. Any person who signs his 
name upon an instrument otherwise than as maker and drawer, 
or acceptor, is deemed to be an indorser. If a person not a 
party to an instrument places his signature thereon in blank 

138 



NEGOTIABLE INSTRUMENTS, ETC. 

before delivery he is liable as indorser. Every person negoti- 
ating an instrument by delivery, or by qualified indorsement, 
warrants that the instrument is genuine and is what it purports 
to be; that he has a good title to it; that all parties indorsing 
before had capacity to contract and that he has no knowledge 
of any fact which would render it valueless. Indorsers are 
liable in the order in which they sign their names. 

Presentment for payment is not necessary in order to charge 
the person primarily liable on the instrument, but if it is by 
its terms payable at a special place, and he is able and willing 
to pay it there at maturity, such ability and willingness are 
equivalent to a tender of payment upon his part so that it will 
not thereafter carry interest. Otherwise presentment for pay- 
ment is necessary in order to charge the drawer and indorsers. 
If the instrument is not payable on demand, presentment must 
be made on the day it falls due and if on demand a reasonable 
time after its issue, except in the case of a "bill of exchange" 
which may be presented for payment within a reasonable time 
after the last negotiation thereof. Presentment for payment 
to be sufficient must be made- by the holder, or some person 
authorized to receive payment, and at a reasonable hour on a 
business day, and at a proper place and to a person primarily 
liable on the instrument, or if he is absent to any person found 
at his place of business. 

If an instrument is payable at a specified place, it must be 
presented there, but if no place of payment is specified, if the 
address of the person to make payment is given, it may be 
there presented, and if no place of payment is specified and no 
address given it may be presented at the- usual place of business 
or residence of the person to make payment, or it may be 
presented to the person obliged to make payment wherever he 
can be found, or at his last known residence or place of busi- 
ness. The instrument must be exhibited to the person from 
whom payment is demanded and when it is paid must be 
delivered up. 

The instrument is dishonored by non-payment when it is duly 

139 



EVERYDAY LAW 

presented for payment and payment is refused or presentment 
is excused or the instrument is overdue and unpaid. 

Sometimes what is called "days of grace" are allowed, that 
is if an instrument is payable on a day certain the person 
bound to pay it can make payment within three days there- 
after but in most states days of grace are abolished. If the 
instrument is payable at a fixed period after date, the time of 
payment is determined by excluding the day from which the 
time is to begin to run and including the day of its payment. 
If an instrument is payable at a bank, it is equivalent gener- 
ally to an order to the bank to pay it. 

If a negotiable instrument, such as a note, check or draft 
is not paid when presented, in order to hold the indorsers 
such instrument must be "protested" for non-payment. A 
protest is a certificate from a notary public that he presented 
the note for payment at the place where it was payable and 
payment was refused and that he has given notice of such non- 
payment to the indorsers. 

Notice to an authorized agent is notice to his principal and 
notice of dishonor may be given by mail. 

A negotiable instrument is discharged by payment or by the 
intentional cancellation thereof by the holder, or by any other 
act which will discharge a simple contract. 

When a negotiable instrument is altered in a material feature 
without the consent of all the parties liable thereon, it is made 
void, except as against the party who has himself made, or 
authorized, or consented to the alterations. Any alteration is 
material which changes the date, or the sum payable, or the 
time or place of payment, or the number or relation of the 
parties, or the currency in which payment is to be made, or 
adds a place of payment when none is specified, or any other 
change which alters the effect of the instrument. 

A "bill of exchange," or draft is an unconditional order in 
writing addressed by one person to another signed by the per on 
giving it, called the "drawer," requiring the person to whom 
it is addressed, called the "drawee," to pay on demand, or at 

140 



NEGOTIABLE INSTRUMENTS, ETC. 

a fixed or determinable future time, a sum certain in money to 
the order of a named person, or to the bearer, called the "payee." 

The drawee is not liable on the bill unless he accepts it. A 
.bill may be addressed to one or more drawees jointly, but not 
to two or more in the alternative or in succession. 

An inland bill of exchange is one which is payable within a 
state or country. Any other is a foreign bill. If the drawer 
and drawee are the same person, or if the latter is a fictitious 
person, or a person not having capacity to contract, the holder 
may treat the instrument either as a bill of exchange or a 
promissory note at his election. 

The acceptance of a bill of exchange is made by the person 
to whom it was addressed, or drawee, writing his name across 
the fac3 of the bill prefixed by the word "accepted" with the 
date and such acceptance may under some circumstances be 
written on a paper other than the bill itself as by a memoran- 
dum signed by the acceptor to be attached to the bill. 

Usually the drawee is allowed twenty-four hours after pre- 
sentation in which to decide whether or not he will accept the 
bill, but if he does accept it it dates as of the day of presenta- 
tion. If the drawee destroys the bill, or refuses within twenty- 
four hours to return the bill accepted or unaccepted, he will 
be deemed to have accepted the same. A bill of exchange 
may be accepted before it is signed and the acceptance may be 
qualified or may be general. A general acceptance consents 
to all the terms of the bill but a qualified acceptance is where 
the drawee imposes some additional condition, or accepts it 
only for a smaller amount. The holder of a bill of exchange 
may refuse to accept a qualified acceptance and demand that 
unqualified acceptance be made or refused, 

Presentment is necessary in order to fix the maturity of the 
instrument. It must be made within a reasonable time, at a 
reasonable hour, on a business day and if two or more drawees 
are named, presentment must be made to all. It must not be 
presented on a holiday or Sunday and the holder must exercise 
due diligence to present the bill for acceptance before present- 
ing it for payment. Presentment for acceptance is excused 

141 



EVERYDAY LAW 

where the drawee is dead, or has absconded, or is a fictitious 
person, or where after the exercise of reasonable diligence, 
presentment cannot be made. 

Where a bill is duly presented for acceptance and is not 
accepted within the prescribed time, if the holder wishes to 
have recourse to the indorsers, he must give notice of the same 
to the indorsers and usually the bill is protested in the same 
manner as a note. 

The protest of a negotiable instrument, either promissory note 
or bill of exchange, must be either annexed to it or contain a 
copy thereof, must be under the hand and seal of a notary 
and specify the time and place of presentment, how it was 
presented, the cause, or reason, for protesting the bill, the 
demand made and the answer given by the drawee, or that he 
could not be found. 

A protest may not only be made by a notary, but by any re- 
spectable person in the place where the bill is dishonored in 
the presence of two or more creditable witnesses. When a 
bill is protested, protest must be made on the day of its dis- 
honor and it must be protested at the place where it is dis- 
honored. Indorsers on a bill of exchange are usually liable in 
the order in which their names appear. 

A negotiable promissory note is an unconditional promise in 
writing made by one person to another, signed by the maker, 
engaging to pay on demand, or at a fixed or determinable 
future time, to order, or bearer, a certain sum of money, and 
if a note is drawn to the maker's own order, it is not com- 
plete until he indorses it. 

A check is a bill of exchange drawn on a bank, payable on 
demand, and must be presented for payment the same day of 
its receipt, or within a reasonable time after its issue, or the 
drawer will be discharged from liability thereon to the extent 
of the loss caused by the delay; that is if the check be not 
presented for two or three days, and it would have been paid 
if presented at once but meantime the bank fails so that the 
check is not good, the loss falls on the holder. Ordinarily a 
check of itself does not operate as an assignment of any part 

142 



NEGOTIABLE INSTRUMENTS, ETC. 

of the funds to the credit of the drawer with the bank, and 
the bank is not liable to the holder until it accepts or certifies 
the check. The maker of a check may . stop payment of it 
before it reaches the bank. 

All negotiable paper falling due on a holiday or Sunday is 
payable on the succeeding day. 

A "due bill" and an "I. O. U." are popular forms of a memo- 
randum of a debt. The former may simply say "Due Tom 
Jones ten dollars, John Smith." In such case a promise is 
implied to pay Jones the sum mentioned on demand. It may 
add a statement of when the money is payable. The letters 
"I. O. U." followed by the mention of a sum of money, and a 
signature, mean that the person signing owes the person to 
whom it was given the amount stated which is payable on 
demand. If a due bill says "Due Tom Jones, or order (or 
bearer) ten dollars," it amounts to a promissory note. 

Form of promissory note. The following is a usual form of 
a promissory note: 

Detroit, Mich., June 23, 1913. 
"$100. 

Six months after date for value received, I promise to pay 
to John Smith, or order, one hundred dollars with interest 
from date at six per cent. Payable at the First National 
Bank of Detroit. 

Henry Jones." 

The note instead of saying "or order," may say "or bearer," 
or say "to the order of John Smith," instead of "John Smith 
or order." It may also say instead of "interest from date," 
"interest after maturity," or "after due;" or mention no place 
of payment. 

Form of check. The following is the usual form of a check: 
"$10. Detroit, Mich., June 23, 1913. 

First National Bank of Detroit, Mich. Pay to the order of 
John Smith ten dollars. 

Henry Jones." 

143 



EVERYDAY LAW 

Form of draft or bill of exchange. The following is the usual 
form of a draft or bill of exchange: 

"$100. Detroit, Mich., June 23, 1913. 

At sight pay to the order of John Smith one hundred dollars 
and charge the same to my account. 

Henry Jones. 

To Peter Jackson, 

Boston, Mass." 
(For further information as to checks see the subject Banks 
and Banking.) 



144 



CHAPTER XXX. 



NUISANCE. 

IN accordance with the maxim of law that no one can use 
his property in a manner which causes damage, material 
annoyance, or inconvenience, to another, or which prevents 
the reasonable use of his property, arises what is called 
the law of "nuisance." A nuisance is anything that unlawfully 
causes hurt, inconvenience or damage to another in the enjoy- 
ment of his property. To constitute a nuisance in the use or 
condition of premises, some public or private right must be 
violated and with the result of causing annoyance, inconven- 
ience, or injury because of the invasion of such right. 

A nuisance may be either "public" or private." In the former 
case it affects the rights to which every citizen is entitled as 
a part of the public, whereas a private nuisance is something 
that is done to the annoyance or detriment of the lands, or 
dwellings, of another, not amounting to what is called a 
"trespass" or actual invasion on such property. A nuisance 
in law is an act, or occupation, or condition of premises, or 
structure, which causes annoyance or injury to health, or danger 
to people in the locality; for example, a gambling or disorderly 
house; or keeping a dangerous animal known to be such and 
suffering him to go at large, as a large bull dog accustomed 
to bite people; or exposing a person afflicted with a contagious 
disease in public; or leaving unburied a corpse for which the 
defendant was bound to provide burial; or conducting an offen- 
sive business like a soap factory; or acts of public indecency. 
A thing may be a nuisance in one place, which is not in another, 
as for example, a man may maintain a soap factory, or slaughter 
house, in the fields away from the town, but if the town grows 
so that the adjacent land is occupied for dwellings then it 
will become a nuisance. 

The motive of a person who erects and carries on an offensive 
occupation or occupies a building for offensive purposes, is 
immaterial. 

It is not always easy to determine what is a nuisance, but as 

a general rule any use of premises which of itself or by its use 

145 



EVERYDAY LAW 

directly injures a neighborhood is a nuisance. A saloon has 
been held to be a nuisance if established in a high class resi- 
dence neighborhood. Every person who lives in a city, or 
town, must submit to certain inconveniences caused by the 
neighbors in the use of their property, as a blacksmith shop, 
but one cannot establish a trade or business in a residence 
locality which unreasonably depreciates the value of adjacent 
property, or interferes with the reasonable enjoyment of the 
property of the neighbors, for example, a gambling or bawdy 
house is a nuisance in itself; and the keeping of bees in a resi- 
dence locality so that they are a source of annoyance; and the 
ringing of a heavy factory bell; or dangerous cellar doors; or 
a hospital for contagious diseases, all may constitute a nuisance. 
The discharge of sewerage with refuse may be a nuisance, and 
a place for the manufacture and storage of explosives. Some- 
times a factory is a nuisance, or a garbage plant. Obscene 
and ribald conduct is a nuisance, so is any obstruction upon a 
street or highway, or the obstruction of a navigable stream, 
or causing water to overflow upon adjacent property, or the 
pollution of a stream of water. The maintenance of a factory 
in a manner so as to create offensive odors or cause dust or 
dirt, or soot, to be carried into houses, or make loud noises, 
may sometimes be a nuisance, and so is anything which causes 
an offense to public decency. So is causing noxious smells, or 
jarring of a person's premises by vibration of heavy machinery; 
indeed anything which causes continual danger to life or limb, 
may be a nuisance, or anything which causes injury to health 
or. interferes with thje reasonable enjoyment of adjacent property \ 

Any person who actually creates a nuisance is liable for all 
damages resulting therefrom and he may be compelled to desist 
by an injunction. 

A public nuisance as a rule does not furnish ground for an 
action at law by an individual who merely suffers an injury 
which is in common to the general public, as the occupation of 
a street by railroad tracks, but if he suffers an injury peculiar 
to himself he may sometimes have the right to maintain an 
action, but the special injury must be of a substantial character. 

146 



NUISANCE 

In ancient times a man who suffered from a nuisance could 
maintain an action against the one who caused it, or under some 
circumstances he had the right to abate the same by his own 
act, as for example if a dangerous bull dog should be running 
at large anyone in danger of being bitten has the right to 
kill it, or he may kill a dog which haunts his premises and 
by barking and howling becomes a nuisance, or he can cut off 
branches of his neighbor's trees which overhang his land. 
Ordinarily before a person can by his own act abate the nui- 
sance he must give notice to the person causing it to remove 
it and anyone who undertakes to abate a nuisance, and so 
become a judge as to its existence, acts at his peril and may 
subject himself to criminal prosecution or to respond in 
damages. 

The ordinary course to pursue for the removal of a nuisance 
is to take legal advice and bring an action in the proper court, 
and no general rules can be laid down to govern all cases. 



147 



CHAPTER XXXI. 



PARTNERSHIP. 

A PARTNERSHIP, or co-partnership as it is sometimes 
called, is a contract between two or more persons 
competent to make it to combine their money, effects, 
labor and skill, or some, or all of them, for the purpose 
of engaging in lawful commerce or business and to divide the 
profits, or bear the losses, in certain agreed proportions. It is 
a relation which exists because of an express or implied agree- 
ment between two or more persons to carry on a business for 
their common benefit. No particular form of contract is neces- 
sary to create a partnership, it may be in writing or oral, or it 
may result from the actions or conduct of the parties as by 
leading people to believe they are partners. In some states 
the statutes require a partnership agreement to be in writing 
duly executed and recorded. The parties must be competent 
to contract and in some states certain parties rest under disa- 
bilites which forbid a partnership as married women, infants, 
foreign enemies, or corporations, although an infant can make 
a partnership agreement, subject to revocation when he reaches 
his majority. 

A partnership can be formed for any lawful purpose or for 
carrying on any lawful business, and the effect of the agree- 
ment is that the parties combine their capital and labor and 
divide the profits, or share the losses, in agreed proportions. 
Members of a voluntary association under some circumstances 
may be partners. A partnership cannot be formed for the prose- 
cution of an illegal business, or for the conduct of a lawful 
business in an illegal manner, and in such case the courts will 
not recognize its existence, either by compelling the partners 
to account to each other, or enforcing its claims against third 
parties. In an action by a partnership, if the court discovers 
that the business is illegal, it will refuse to give relief, even 
though the illegality be not set up by either party. 

To constitue a partnership, there must be either an agreement 
of the parties to be partners, or it must result as a necessary con- 
sequence of their acts, as for example, holding themselves out 

148 






PARTNERSHIP 

to the public as partners. It is generally a question of the 
intent of the parties and an agreement may be so uncertain 
and vague that the court will not hold it to be a partnership. 
Usually any agreement between two or more parties by which 
they engage in business with the intent to share the profits is in 
law a partnership and if losses result each partner will be 
liable. Sometimes, although one party receives a share of the 
profits as compensation for his work, or services, he may not 
be held to be a partner, as where a traveling salesman in addi- 
tion to his salary is to receive a certain percentage on his 
sales, but if one by his conduct holds himself out as a partner 
and induces others to deal with him and his associates in that 
capacity, he cannot afterwards claim that there was no par- 
nership. Any conduct on the part of a person which leads 
others to suppose that he is a partner, will justify a court in 
holding him liable to the party who is misled for any loss he 
may incur in consequence or for any obligation incurred on 
the strength of such conduct. 

The law in some states recognizes what is called a "special" 
partnership, that is several persons may agree to form a special, 
or limited, partnership; that one shall contribute a specified sum 
and if notice of such limited partnership is given in the manner 
provided by statute, as by publication of a notice to that 
effect in a newspaper, the partner who contributes the specified 
sum of money will not be liable beyond the extent of the sum 
contributed. He is called a "special partner" and the others 
are called "general partners," and the general, but not the 
special, partners are liable if losses ensue which are not covered 
by the capital contributed. 

Any name may be adopted for a partnership, if not forbidden 
by statute, but the partnership cannot bring suits in such 
name, but suit must be brought in the name of the individual 
partners, and if a partnership is sued the names of the partners 
must be set forth. The persons organizing a partnership have 
the right to use their names honestly as the firm name although 
other persons of like name carrying on a partnership in the 
same style, may suffer loss of business in consequence. 

149 



EVERYDAY LAW 

Everything which is contributed by any partner to the capital 
stock is firm property and so are the profits acquired in the 
business. 

The obligations of partners are that each partner will act in 
the utmost good faith toward the others and will comply with 
the terms of the partnership agreement, whether the agree- 
ment is in writing or oral. Parnership articles usually contain 
a provision that each partner shall give his entire time to the 
service of the firm and the partners will be entitled to the 
profits in the proportions agreed upon. A partner cannot 
engage in business antagonistic to that of his firm, nor can he 
use the partnership property for the payment of his own debt, 
nor can he pledge the credit of the partnership for the pay- 
ment of his individual debt. One member of a firm cannot 
without the consent of his co-partners gain secret profits from 
the business of the firm, nor engage in any transaction which 
is fraudulent toward the firm, or his fellow partners, and if 
he acquires secret profits he must account to the partnership 
for them. 

Usually each member of the firm is personally liable for its 
debts and each member of the partnership is bound by the act 
of each individual composing the firm, as regards the business 
conducted. The partnership agreement may limit the author- 
ity of each partner, but such restrictions do not bind outside 
parties who have no notice of such limitation if the act done is 
within the apparent scope of the authority of the partner. 
Each partner has the implied authority to bind the firm and each 
member by contracts and obligations executed in the firm name, 
which are within the scope of the business usually carried on 
by the firm. Each member of the firm has an implied author- 
ity to dispose of the entire property of the firm, if such transfer 
is made in due course of business, but such a disposal of prop- 
erty may be a fraud on the partners who do not consent to it, 
and will vest the purchaser only with the interest of the part- 
ner who conducts the transaction. Each partner has implied 
authority to borrow money on the credit of the firm, to re- 
ceive payment of debts due it, but a partnership is not obli- 

150 



PARTNERSHIP 

gated for the individual debts of its members, nor can an 
individual partner pay his own debt by setting off against it 
the amount due the firm from his debtor. Each member 
of the firm has the power to execute notes and sign checks, 
unless such authority is taken away from him by the partner- 
ship agreement and the person dealing with him has notice of 
such want of authority. One partner cannot give a partnership 
note in payment of his own debt, but if such note is negotiated 
before maturity, it may be binding on the firm. A partner- 
ship has no right, unless all the partners agree, to become 
security, or surety, for another, nor to make accommodation 
paper, that is endorse a note for the accommodation of a friend 
of the individual partner. 

A firm is liable for the wrongful acts of a partner while acting 
in the ordinary course of the business carried on by the firm, 
or by authority of his fellow partners. 

One partner can sell his interest in the firm, but if such a sale 
is not provided for in the partnership articles, it will amount 
to a dissolution of the firm. One member of the firm can re- 
tire and sell out to his associates and thereby the seller loses 
all interest in the partnership property. In the absence of 
an agreement between the partners providing for the death of 
a partner such death will work a dissolution of the firm and 
thereupon arises the duty on the part of the surviving mem- 
bers to liquidate its business and account to the personal 
representatives of the deceased partner for his interest in the 
partnership. One partner can dissolve the partnership at any 
time, even though the articles provide that it shall continue 
for a specified period which has not elapsed, but in such case 
he may be liable to his associates for damages. In most 
states statutes provide how the affairs of a partnership may 
be wound up in case of the death of a partner, so that the 
surviving partner becomes the administrator of the partnership 
estate and can proceed to wind up the business, accounting 
for what is left after the debts are paid. 

The good will of a firm, that is the probability, because of 
long continued business and high reputation in the trade, that 

151 



EVERYDAY LAW 

the customers will continue their patronage, is an asset of the 
partnership to be accounted for on its dissolution. 

When a partnership is dissolved, the partners are bound to 
wind its affairs up as speedily as possible and, after payment 
of its obligations, divide the residue in the agreed proportions. 



152 



CHAPTER XXXII. 



PATENTS, TRADEMARKS AND COPYRIGHT. 

Patents. 

A NY person who invents or discovers any new or useful 
^JL art, machine, manufacture, or composition, or process; 
„JlJL or any new and useful improvement thereof, or any 
new original and ornamental design for any article 
of manufacture, is entitled upon compliance with the regula- 
tions and laws regulating the issue of patents to receive an 
instrument issued under the authority of the United States, 
granting to the inventor, or designer, his heirs, or assigns, 
for the term of seventeen years the exclusive right to make, 
use and sell his invention throughout the United States and its 
territories. This instrument is called * 'letters patents ' The 
object of the patent laws of the United States is to secure to 
an inventor of some new and useful article a monopoly for a 
specified period of the right to manufacture and sell his inven- 
tion. No one has a right to use such patented invention, or 
discovery, not even the United States, without the permission 
of the owner, during the life of the patent. 

A mere idea cannot be patented, but only the means for using 
it. The discoverer of a new substance, or principle of nature, 
cannot patent it but he can secure a patent for the means 
devised for utilizing the principle, as for example a method of 
applying electricity to the moving of vehicles. A man can 
secure a patent for a process and this process is separate and 
independent of any machine or apparatus used in performing 
it. He can patent either a chemical or mechanical process. 
Usually however patents are issued for some combination of 
devices called a "machine", or some article for popular use, or 
an improvement on some other machine or article. 

It is necessary in order to secure a patent that the subject 
matter must be new or novel, that is never used or known be- 
fore, and it must be useful. This newness, or novelty as it is 
called, may be either in the use of the old means in a new 
way, or changes of shape or form so as to produce new func- 
tions, or a new combination. Nothing can be lawfully patented 

153 



EVERYDAY LAW 






that has been in public use or known before, nor can one pat- 
entee of an improvement in a machine use such new process 
on the old machine, if that is patented, without permission of 
the owner of the patent, neither can the owner of the patented 
machine use a new improvement without the permission of 
the owner of the patent on such improvement. 

It is not easy to concisely state all the various principles 
of law applicable to patents other than giving a general state- 
ment of a few governing principles. Thus a man cannot obtain 
a patent merely because he has done what no one has done 
before, because mere novelty and utility are not enough to 
sustain a patent, but he must do something which an ordinary 
person skilled in the art would not know how to do if the occa- 
sion for it arose. This simplicity of the means employed does 
not operate against the patent, nor does mere complexity in 
the means employed show invention, nor the application of 
mere mechanical skill, nor a double use of an old means for a 
new but similar purpose, nor the substitution of one device 
for another which practically performs the same function. 

The device, or art, or process, to be patentable must not only 
be novel, but it must be useful and adapted for practical use. 

Only the original inventor, or if he is dead his executor or 
administrator, is entitled to a patent, and as between two 
original inventors the one first to make it in this country, or 
to apply, is entitled to receive the patent. 

Patent law is complicated and nice questions of law are 
involved in the litigation arising over patents, and no inventor 
is safe in acting without the advice of an expert in that line. 

One practical suggestion may be made here. Too often an 
inventor assigns his patent to a corporation in consideration 
of part of its stock, instead of giving the company a license 
to manufacture and sell the article on payment to the inventor 
of a percentage of the price by way of royalty. If the con- 
veyance of the patent is absolute the company may fail and 
the patent may be sold and thus the inventor lose the benefit 
of his discovery, whereas if the company simply is given the 
right to manufacture and sell, the inventor retaining the owner- 

154 



PATENTS, TRADEMARKS AND COPYRIGHT 

ship of the patent, the successor of the corporation will either 
be obliged to continue under the old license, or obtain a new 
one. Any one using, or manufacturing a patented article with- 
out the consent of the owner of the patent is liable to account 
to such owner for the profits or pay damages. 

Trade Mark. 

A Trade Mark is a distinctive name, word, mark, emblem, 
design, symbol, or device, used in lawful commerce to indicate, 
or authenticate, the source through which has come, or through 
which has passed, the article upon or to which it is affixed. 

A trade mark is used by a manufacturer or merchant to 
distinguish his goods from those manufactured or sold by 
another, so that they may be known in the market and 
enable him to secure the advantages that result from a repu- 
tation acquired by the superior quality of the article. 

A manufacturer for example who has manufactured a special 
blend of coffee which has become widely and favorably known, 
and which is put up in packages marked in a peculiar way, 
and has acquired a large and extensive patronage, is entitled 
to retain its advantages and the law will not allow any com- 
petitor to manufacture and put on the market a package sub- 
stantially similar so as to mislead a purchaser into believing 
that he is obtaining the original, genuine article, when in 
fact he is obtaining an imitation. The public is entitled to 
protection against imposition, because of an unauthorized imi- 
tation of manufactured goods by unscrupulous men who desire 
to obtain the benefit of the reputation of an article by selling 
an imitation. A man is entitled to the good will of his business. 

A trademark can only be acquired on some article of manu- 
facture, that is, something which is bought and sold in the 
market. A trademark is an exclusive right to be enjoyed by 
the person who first used it as a distinguishing brand for his 
article. A trademark conveys no monopoly, or exclusive right, 
in the goods to which the maker has applied it, but extends 
so far as to prevent competitors imitating the brand or mark 
so as to mislead the public. Only a person who has some 

155 



EVERYDAY LAW 

connection, or dealing, with the goods to which the mark is 
applied is entitled to a trademark, and it is acquired by mere 
continued use and occupation. 

The laws of the United States provide for the registration 
of trademarks. 

Any word, mark, or device, used for identifying specific goods 
may constitute a valid trademark, but it must indicate a dis- 
tinctive origin, or ownership, of the goods to which it is ap- 
plied so as to distinguish such goods from similar goods of 
others. Usually a trademark is some symbol, or device, or 
some arbitrary word. One of the best examples of an arbitrary 
word is "kodac," as applied to a photographic apparatus. 

If the trademark contains misrepresentation, or is calculated 
to deceive the purchaser, the user may subject himself to the 
penalties provided by law and under no circumstances can he 
receive any relief from a court against competitors who have 
imitated his wares or article. 

Merely descriptive words cannot be appropriated as a trade- 
mark; there must be some arbitrary, or fanciful, term, figure 
or device, not descriptive of the goods. Words, marks, or 
names, which simply indicate the quality, style, or character, 
or class of the goods to which they refer cannot constitute a 
trademark, nor marks merely indicating superior qualities, as 
the words "favorite," "standard," or "best." Mere geograph- 
ical names cannot be monopolized in this way, and individual 
names only under exceptional circumstances. Any device, or 
symbol, or character, may be used as a trademark which is 
arbitrary in its character and does not necessarily describe the 
goods upon which it is placed. A combination of words and 
phrases may be used. 

The law forbids the infringement of a trademark by competitors 

and no person can imitate or copy the trademark of another, 
even though it be not copyrighted, or registered, as a trade- 
mark or patent. He cannot imitate it so nearly as to make 
the imitation liable to deceive the public. If he does he may 
be enjoined from its use and made to pay damages. 

156 



PATENTS, TRADEMARKS AND COPYRIGHT 

The law forbids what is called "unfair competition," which 
is an attempt to pass off on the public the goods, or business, 
of one person as and for those of another, and if the trade- 
mark, or device, used by a merchant, or manufacturer, is so 
closely imitated as to be calculated to deceive, the courts 
will protect the original manufacturer by enjoining such unfair 
competition and making the offender account for all profits. 
The reason for the rule is that anyone who has built up a 
good will and reputation for his goods, or business, is entitled 
to all the benefits thereof. Such right, or good will, is prop- 
erty and the owner will be protected in the enjoyment thereof, 
and the wrongdoer made to pay damages and account for any 
profits he may have made by the unlawful use. 

The law of trademarks, like that of patents, is somewhat 
complicated and only a few general principles can be here 
stated. 

Copyright. 

The laws of the United States give the author of any book, 
map, engraving, photograph, painting, model, or design, or musical 
or dramatic composition, an exclusive right to multiply and sell 
copies thereof, or to perform any play or drama. This right is 
secured by the national law of copyright and if the law is com- 
plied with by recording the title, or name, and depositing the 
required number of copies, with the Librarian of Congress, 
a certificate of copyright is issued which gives the owner, or 
designer, the exclusive right to multiply and sell copies for the 
term of twenty-eight years, and at the expiration of such 
term the author, inventor, or designer, if he still be living, or 
his widow or children, if he be dead, have the right to con- 
tinue this exclusive right for the further term of twenty-eight 
years by recording the title of the work and description of 
the article with the Librarian of Congress, and complying 
with other regulations of law within one year before the last 
day of the first term, that is one year before the original 
copyright expires. 

Any literary production may be copyrighted, as can maps, 
charts, dramatic compositions, stage directions and contriv- 

157 



EVERYDAY LAW 

ances for its production, musical composition, engravings, 
photographs and labels. In order to be copyrighted a work 
must be original in the sense that the owner has created it 
by his own skill or judgment without directly copying or imi- 
tating the work of another. If the composition is part new 
and part old, only the new part can be copyrighted. Illegal 
or immoral works are not entitled to copyright. 

The author, inventor, or designer, of the composition, or pro- 
duction, is entitled to obtain a copyright, or two persons can 
obtain a joint copyright. This copyright may be sold as any 
other property or the owner of the copyright may license its 
production under such terms as may be agreed upon. 

To obtain a copyright it is necessary that the person entitled 
to the same shall on or before the day of publication deposit 
with, or mail to, the Librarian of Congress a printed copy of 
the title of the book, map, or other production, or a descrip- 
tion of the printing, drawing, statue, or model, and not later 
than the day of the publication deliver to, or deposit in the 
mail addressed to, the Librarian of Congress, two copies of 
the book or other production with the sworn statement re- 
quired by the statute. A person obtaining a copyright must 
also give notice by inserting in every copy of the book, or 
map, Or other production, the word "copyright," together 
with the year the copyright was obtained and the name of the 
party by whom its was taken out. There is a penalty imposed 
for inserting a false notice of copyright. 

There is a great deal of technical law involved in a discus- 
sion of this subject and in determining what is an infringe- 
ment on the rights of a person owning a copyright in a book 
or other production. Anyone claiming that his rights have 
been infringed, or desiring to learn more in regard to his rights, 
or liabilities, should take expert advice. The Librarian of 
Congress at Washington on application will supply the blank 
forms necessary to secure a copyright and give information 
as to the requirements of the law. 



158 



CHAPTER XXXIII. 



REAL ESTATE. 

PROPERTY is divided into two general classes, "real" 
and "personal." In law the names, "realty," "real 
property," or "real estate," mean practically the same 
thing. In probably all the states rights in real prop- 
erty and the method of transfer of the title thereto, as by deed, 
are regulated by statute which defines what interest in lands 
shall be called real property, and by what persons and in what 
manner conveyances of land shall be made and the formalities 
required for the execution of deeds. In this country a system 
of recording conveyances of lands prevails and conveyances 
are required to be recorded in an office and in books provided 
for the purpose in order to perfect the title. There is a sys- 
tem of registration of land titles, called the "Torrens System," 
which is intended to protect and simplify titles to real estate. 

The law in regard to real estate, or real property, is com- 
plicated because it is a modification of the English law which 
has come down to us through the centuries; it is complicated 
and difficult to understand because of the ancient ideas as to 
the nature of lands and conditions on which it was held and 
the various interests therein. In olden times land was practi- 
cally the great species of property and was regarded with 
veneration and titles were of many different kinds. In Eng- 
land the right to inherit real estate was limited by what was 
called the law of "entail," that is the land descended to the 
oldest son to the exclusion of his brothers and sisters, if any. 
Land was tied up by providing for various interests therein 
dependent upon many conditions and possibilities, for example 
a certain person would be entitled to the use of the land for 
his life and then the property was to go to someone else, either 
to a limited extent or absolutely, or his title might depend 
upon the performance of some duty. In law the subjects of 
"remainder," "reversion" and the like are technical and not 
always easy to understand. A remainder in an estate is what 
is left after some other interest is determined, as where land 
is left to a person for life, remainder to another person; whereas 

159 



* EVERYDAY LAW 

a reversion is where land is conveyed or devised to a person 
on a condition, and if that condition is or is not performed 
the title reverts to, or vests in, someone else. 

In olden times, and at the present time for that matter, 
the terms "lands," " tenements" and "hereditaments," are 

used in conveyances of lands and rights therein. The term 
"land" comprises the ground or earth, and includes not only 
the face of the earth but everything under or over it, and it 
may include the natural productions such as grow on the land, 
as trees, grass, or the natural products of the land, but not 
crops, and includes permanent structures erected on the land. 
Sometimes the word is defined by statute. 

The word "tenement," primarily denotes something that is 
held and includes rights in the land, or what is annexed to 
the land, and in its legal sense means an interest in land or 
some estate or interest connected therewith or growing out 
of it. 

The term "hereditament," includes both lands and tene- 
ments and generally everything that is capable of being in- 
herited, the word meaning in its primary sense what may be 
inherited. There are two kinds of hereditaments, "corporeal," 
such as permanent objects on the land, which may be inher- 
ited, and coal, stone, oil and gas on the land, or arising out 
of it, An incorporeal hereditament is a right issuing out of a 
thing, as for example, rent or the right to use property in a 
certain way, as for example passage over it which is called 
an "easement." 

An absolute ownership of real estate is called a "fee." Real 
estate includes not only the surface of the earth, but whatever 
is under or over it and improvements of a permanent character 
placed upon it, such as buildings, fences, walls. 

All rights in lands are regulated and governed by the law of 
the place where they are situated, whereas rights in personal 
property follow the person of the owner. 

"Title" means the right whereby we hold either real or per- 
sonal property, thus the title to land may be perfect, as where 

160 






REAL ESTATE 

a person owns it absolutely without any incumbrances or liens, 
or it may be qualified. 

The method by which interests in lands are transferred is 

regulated by statutes; for example a statute may provide that 
an absolute title to land, or any interest therein, may be trans- 
ferred only by an instrument in writing acknowledged, as it 
is expressed, before a notary public, or other officer authorized 
to take acknowledgments. An acknowledgment is simply an 
appearance of the party before such officer and making a decla- 
ration that the instrument is executed freely and the officer 
before whom such acknowledgment is made certifies accord- 
ingly under his official seal, whereupon the instrument is 
recorded in an office established by law for that purpose. A 
conveyance of land is called "deed," or the property may be 
leased, as by a lease, or encumbered with a lien, as by a mort- 
gage or deed of trust, and title to lands may be absolute, or 
be a qualified interest, as for example, the use of it for life; 
or the conveyance may be coupled with a condition that is 
the person to whom it is transferred may have the right to 
occupy and use it unless some condition imposed arises as for 
example, if a conveyance of land is made to a woman,, or man, 
to be held by her or him until she or he is married. 

Certain articles which were ordinarily wholly moveable and 
which may at the time even be disconnected with the land, 
may be regarded as real property, such as keys, locks upon 
doors, millstones in a mill or window blinds which may be 
detached from the house; hence a class of articles known as 
"fixtures" is regarded as real property. A fixture is something 
of a permanent nature that is fitted, Or actually applied, to a 
building and passes with it. The old rule of common law was 
that whatever was affixed to the. land became a part of it. 
It is not always easy to tell what is a fixture. Mere weight 
in an object does not make it a fixture, nor does the fastening 
of an article to the wall or floor to keep it steady, but wherever 
an article is calculated to form part of a building it is generally 
a fixture. The owner, or landlord, of the property may make 
an agreement with the tenant that the latter may put in cer- 

1G1 



EVERYDAY LAW 






tain articles and attach them to the building and that they 
may be removed when the tenancy ceases. 

To become a fixture the article must not be merely laid upon 
the ground, it must be fastened or affixed to the buildings. 
Mantels in a house, locks on the doors, iron stoves in brick 
work are fixtures. In a house a furnace may or may not be 
a fixture, so also stoves, cupboards, gas fixtures, also may, or 
may not, be fixtures according to the agreement of the parties 
or the way they are attached to the building. Whatever is 
merely attached for temporary purposes will not ordinarily 
be a fixture. 

As is often the case in regard to other matters, the law in 
regard to lands, and interests therein is complicated and it is 
impossible to state all the principles applicable to the owner- 
ship of lands in any brief general statement. 



162 



CHAPTER XXXIV. 



SALES. 



A SALE is the transfer by the owner, in such case called 
the "seller," of property, or an interest therein, to 
another person, called the "buyer," for a price paid, 
or agreed to be paid, in money. A sale, or purchase, 
may be by an agent acting under authority given him to trans- 
act the business. In law there is a difference between a sale 
and an exchange of property, or barter, although in principle 
they are much the same thing. There may be an agreement 
to sell, as where the seller agrees to transfer the property 
for an agreed price after its manufacture or something has 
been done to it, or after a stated period of time. 

In order to constitute a valid contract of sale it must first 
be made by parties competent to contract, and next there must 
be something to be sold either in existence, or to be acquired, 
or to be manufactured, and thirdly there must be a price agreed 
upon to be paid in money at the time, or at a future date, or 
in some cases where a sale is made without any price being 
fixed the law implies an agreement on the part of the buyer to 
pay the market price, or a reasonable price. To complete a 
contract of sale there must be what is called a "meeting of 
the minds," that is the agreement must be mutual and com- 
plete. The buyer may make an offer, or the seller may make 
an offer, but in order to constitute a meeting of the minds 
there must be an unconditional acceptance of the proposal, 
or offer; or if some modification is suggested it amounts simply 
to a counter proposal, or new offer, and that must be accepted 
or agreed to. 

In law the seller may give a proposed buyer an "option" 
to buy the property within a certain time and if this option is 
exercised within the time by the buyer, it will constitute a 
complete sale. In such case he is simply given the privilege 
of buying the property and such offer may be withdrawn at 
any time before it is accepted. If however one gives another 
at his request, and with his consent, an option to buy the 
property for a certain price within a certain time, this option 

1G3 



EVERYDAY LAW 






cannot be withdrawn, or cancelled, before the expiration of 
the time agreed upon. 

In most every state it is provided by a statute, which is known 
as the "statute of frauds,' ' that no contract for the sale of goods, 
wares or merchandise, for the price of thirty dollars, or upward, 
shall be held to be good unless the buyer shall accept part of 
the goods so sold, or actually receive the same, or give some- 
thing in earnest to bind the bargain, or in part payment, or un- 
less some note or memorandum in writing be made of the bar- 
gain and signed by the parties to be charged with such contract, 
or their agents lawfully authorized. This statute is in force 
in practically all of the states, it was derived from an 
old English statute called "the statute of frauds and perjuries." 

The effect of this statute is that no verbal contract for the 
sale of goods or merchandise which is required by the statute 
to be in writing, or where earnest money is not paid, can be 
enforced by suit, but its performance is optional with the 
party making the agreement. 

Fraud, or imposition, or misrepresentation, on the part of the 
seller will make the sale liable to be set aside on the applica- 
tion of the party deceived, but there is a maxim of law to 
the effect that the buyer must beware because of the tendency 
of a seller to exaggerate the value of his goods. A sale may 
be made by warranty, that is the seller may warrant certain 
qualities, or condition of the articles sold. Sometimes the 
law implies a warranty, as that the seller has a good title to 
the goods. There is an implied warranty in the sale of notes, 
bonds, or other securities, that they are genuine, but in the 
sale of goods there is no implied warranty of quality or sound- 
ness, or that they are fit for any particular purpose. When an 
article is sold without the buyer seeing it the law implies that 
it will be as represented or be up to sample. There are many 
fine distinctions as to the kind of representations a seller may 
safely make, or upon which the buyer may safely rely. 

The law has never given a definition of fraud, but each par- 
ticular case is determined according to the facts shown. A 
seller guilty of deceit, or misrepresentation, may be liable 

1G1 



EVERYDAY LAW 

if the buyer has either relied on such representations, or has 
been deceived thereby. This is particularly so as to defects 
which cannot be readily noticed. A buyer cannot rely upon 
representations made by the seller, even though they prove 
false, if he has at hand means of ascertaining whether such 
representations are true, and does not investigate, because 
he can easily satisfy himself as to the truth of such repre- 
sentations, or he may require an express warranty. An ex- 
ception to this rule is where the buyer reposes special trust 
in the seller because of confidential relations, such as the 
relation of attorney and client. 

To complete a sale there must be delivery of the goods, or 
an offer to deliver them. If no place is designated for the 
delivery, the delivery is generally to be made at the place 
where the goods are at the time of the sale. If a delivery is 
to be made by a carrier, they must be delivered at the freight 
station of such carrier nearest the place where the goods are ' 
sold. Sales of merchandise are sometimes made f. o. b., 
which means delivered on board the cars for transportation. 
If any special agreement is made either as to the condition, 
identity or quality of goods when they are not exhibited to 
the buyer, such buyer is not obliged to accept them unless 
they comply with such condition or quality. In case the 
goods are not up to sample, or not as represented, the buyer 
must return them, or offer to do so within a reasonable time 
under the circumstances, or he will be deemed to ratify the 
transaction. 

Generally in a sale of goods, unless some future time of pay- 
ment is agreed upon, payment must be made when the goods 
are delivered. The property in the goods sold will not pass 
without a delivery of the goods so far as third parties are 
concerned, although as between the parties themselves the 
sale may be good. The goods may be in the possession of a 
third party and the title will pass when an order is given on 
the third party to deliver such goods to the buyer and the 
price is paid. 

A great many controversies have arisen where goods have 

165 



SALES 



been consigned, or conditionally sold. It is often a question 
whether a transaction amounts to a consignment of goods to 
a factor, or agent, to be sold by him on commission, the title 
to the goods to remain in the consignor, or whether the trans- 
action places the title to the goods in the consignee. In the 
same way questions are often raised in regard to the nature 
and effect of what are called * 'conditional sales." A condi- 
tional sale is where the title to the goods remains in the 
seller until payment of the price, but the buyer is entitled to 
the possession and use of the goods until ^default in payment. 
The law of conditional sales, is not very clear, it sometimes 
depends upon state statutes and legal advice should be taken 
if there is any doubt. 

When a sale is made and the price paid, if the buyer leaves 
the goods in the custody of the seller, the latter will not be 
liable for the loss of such property unless he has failed to 
exercise reasonable care under the circumstances. For ex- 
ample, where a horse was sold to a party who paid the seller 
the agreed price but on request of the seller allowed him to 
retain the horse to take the vehicle back to the stable and 
the horse was to be delivered the following day to the buyer, 
and that night the horse was burned, the loss fell on the 
buyer, as the ownership of the animal had passed by the pay- 
ment of the price and its acceptance, and the seller could be 
held liable only for such ordinary and usual care as the aver- 
( age man would take of his own property and the seller did 
care for the horse as he had been accustomed to do before 
the sale. 

The seller of merchandise may exercise a right which is called 
"stoppage in transitu, " which is a resumption by such seller 
of the possession of goods not paid for while on their way to 
the vendee and before he has acquired actual possession of 
them. To exercise this right it must appear that the goods 
sold are unpaid for, either wholly or in part, and that the 
goods are still in transit, and that the buyer is insolvent. 
This right may be exercised not only by the seller himself, 
but also by persons occupying practically the same position, 

1G6 



: 



EVERYDAY LAW 

as by a consignor, who has purchased the goods. In every 
case where it is desired to exercise this right legal advice 
should be taken. 

The law of sales is somewhat complicated, not as applied 
to the ordinary and usual transactions of business men, but 
where the exact facts are in doubt. It is not possible to 
here state all the principles with their modifications governing 
the law of sales, but we have given most of the elementary 
rules governing the subject. Probably every state has statutes 
which apply to all sales, whether absolute or conditional; 
they are not uniform but differ, especially in regard to con- 
ditional sales. 



167 



CHAPTER XXXV. 



SURETIES. 

IT is common for one person to become responsible for the 
failure of another to perform some obligation, or for the 
debts of another. The person for whom this obligation 
is incurred is called the "principal," while the person as- 
suming the obligation under certain conditions is the "surety." 
One person may make himself liable for the failure of another 
to perform any duty or meet any obligation, as by .indorsing 
a note in which case he is an "indorser," or he may guarantee 
the performance of a contract in which case he is a "guaran- 
tor," or he may make himself liable by express contract for 
the payment of the debt, or for any kind of an obligation, 
of another. 

In practically all the states it is provided by statute that no 
person shall be held for the debt or default of another unless 
the undertaking be evidenced by some writing signed by the 
party to be charged or his duly authorized agent. Therefore, 
as a general thing a man may become surety for another only 
by entering into some written contract, still he may incur an 
obligation by assuming primary liability as where he introduces 
a prospective buyer and tells the seller to charge the goods 
to him instead of to the buyer. This however is such a per- 
son's own primary obligation, but if he wishes to merely be- 
come surety that the buyer will pay for the goods he must 
sign some kind of writing. 

It is a rule of law that if the principal is not bound by a 
contract because of fraud practiced by the person with whom 
it is made the surety is not liable; but the surety cannot com- 
plain of any fraud perpetrated on his principal if such princi- 
pal does not complain, and although a person is induced to 
become surety by fraud of his principal in inducing the surety 
to make himself liable, he will not escape liability if the per- 
son to whom security is given is ignorant, or has no notice, 
of any such fraud. The agreement of a surety is not binding 
when the contract between the parties primarily liable is 
void because of illegality. 

168 



SURETIES 

Any writing evidencing an intent on the part of one person 
to become surety for another creates an obligation on the part 
of such surety to make good any loss, or make any payment 
for which he has made himself liable, in case of default on the 
part of the principal. A party may become surety for another 
not only by furnishing the credit of his name but by depositing 
securities or goods to be held as security for the performance 
of the contract by the principal. 

When the principal has performed his obligation, the liability 
of the surety ends; a surety is also discharged from liability 
if the creditor deprives him of any right he would have had 
against the principal, as for example, if a creditor could have 
collected a dividend from the bankrupt estate of his debtor 
but lost the right by delay, the surety would be entitled to 
the benefit of that dividend by way of reduction of his liability; 
or if the creditor by reasonable care could have collected his 
debt and afterwards because of an unreasonable delay the 
debtor becomes insolvent so that nothing can be collected 
from him the surety will be discharged. A surety can be 
discharged by a special release. A surety may be discharged 
by the creditor extending the time of payment fixed by the 
contract without the consent of such surety. A surety may 
be discharged by an act of fraud practiced upon him by the 
creditor, as by inducing him to give up securities held by him 
by the statement that the debt is paid. The surety on a con- 
tractor's bond is discharged if any modification be made in 
the contract for the erection of a building without the consent 
of the surety. And so the indorser on a note is released if 
the payee of the note after its maturity, or protest, gives the 
maker an extension of time for payment without the consent 
of such indorser, because the act indicates an intent of the 
creditor to rely on the credit of the maker of the note and not 
on that of the indorser. The surety on a bond may be re- 
leased by a failure to give notice of some default, or by non- 
compliance with some condition, according to the terms of 
such undertaking. 

At the present time the business of becoming surety on 

169 



EVERYDAY LAW 

bonds or other undertakings is carried on by corporations 
organized for that purpose. They issue contracts, or policies, 
which contain many provisos, limitations and conditions for 
notice and that certain things shall Or shall not be done by 
the principal, and non-compliance with any one of these condi- 
tions may prevent recovery in case of loss. 



170 



CHAPTER XXXVI. 



TRUSTS. 

AS here used the word "trust" does not mean a combi- 
nation of corporations or individuals to monopolize 
h a certain line of business or manufacture, but some- 
thing very different. 
Frequently real or personal property is conveyed, or trans- 
ferred, to a person, or corporation, because of confidence re- 
posed in him, or it, in order that the property so conveyed, 
or transferred, shall be managed and the income applied, or 
the property disposed of, according to the directions of the 
party making such conveyance, or transfer. A holding of 
property, without owning it, subject to the duty of employing it, 
or applying its proceeds according to the directions given by 
the person from whom it is derived, is called a "trust." The 
party holding such property in confidence, or for specified 
uses, is called a "trustee ;" the party conveying, or trans- 
ferring, the property to the trustee is variously called "trus- 
tor," "donor, " "creator," or "founder;" the person for whose 
benefit property is so given is called the "cestui que trust," 
or "beneficiary." This interest may be created either by a 
writing, such as a deed, or contract, or by last will and 
testament. 

When a writing conveys property and defines the uses to which 
it is to be put, it is called an "express trust." Sometimes 
the law implies a trust, where from the nature of the trans- 
action it must be inferred that a party in possession is not 
entitled to the ownership of the property, but really holds it 
for the benefit of the person entitled to either the benefit, or 
possession, of it, as where the purchase price of land is paid 
by one party but the deed is made to another party, in which 
case there is an implied trust, or inference, that the person in 
whom the title is placed holds it for the benefit of the per- 
son who has paid the price. Often there is what is called a 
"resulting trust," which is presumed to exist from the supposed 
intention of the parties and the nature of the transaction. 
Where a man buys property with the money of another he will 

171 



EVERYDAY LAW 

be considered a trustee for the one whose money has been 
used. The distinction between implied, resulting and con- 
structive trusts is not always altogether clear. Statutes exist 
in most states defining and limiting trusts. 

A trust may be what is called "passive," that is where the 
trustee is a mere depository of the property without any duty 
to perform in regard to it, or "active," where the trustee is 
to hold and manage the property and dispose of either it or 
the income in a certain way. A trust may be either "public," 
as where property is conveyed to trustees for the founding of 
a hospital, or college, or it may be "private" where property 
is placed in the hands of a trustee to manage it and pay over 
the income to certain individual parties, or do something else 
in regard to it. 

Under the law an express trust must be created by an instru- 
ment in writing and the creator of the trust must be a person 
competent to make a contract, or make a will. The beneficiary 
of a trust may be any person, as an infant, or insane person, 
but under statutes of various states limitations are placed 
upon the power to create a trust so far as its duration or 
extent are concerned. For example, a trust cannot be created 
so as to create a perpetuity as it is called, but its continuance 
must be limited in extent of time; that is property may be 
conveyed in trust so as to give living parties the benefit of 
it during life and generally for thirty years thereafter. This 
rule as to perpetuities does not apply where the beneficiary 
of a trust is a charity or a school. The law provides that 
no one can convey property to a trustee for his own use in 
fraud of his creditors. Any kind of property may be the sub- 
ject of a trust. Sometimes what is called a "spendthrift trust" 
is created, as where the beneficiary is improvident and the 
trustee is directed to pay over only the income without power 
of anticipation. Trusts in land especially must be created by 
deed or will and many states limit their conditions and dura- 
tion as well as methods of creation. 

It is not necessary that the creator of a trust constitute a 
third person trustee and transfer the property to him, but 

172 






TRUSTS 

one may constitute himself a trustee by making a declaration 
in writing that he holds the property in trust for the benefit 
of certain parties, or for certain purposes. The court will 
scrutinize all such transactions in order to prevent any fraud 
on creditors. Usually there must be a transfer not only of 
title, but a delivery, in the case of lands by passing the deed 
and having its recorded, or in the case of personal property 
by actually giving possession of it to the trustee. 

Nice distinctions sometimes arise in regard to the construc- 
tion of trusts, as where by his last will a person devises his 
property in trust for some public use, as to found a college or 
school, or charitable institution and the provisions are indefi- 
nite. The deed or will must with reasonable certainty specify 
the objects and purposes of the trust and the duties of the 
trustee as to the management and disposition of the property, 
or its income. Sometimes when the object of a charitable 
trust has failed, the court will direct the trustee to apply the 
income to some kindred purpose, or, upon the failure of the 
objects of a trust, the property may revert to the heirs of the 
creator of the trust. Trusts of land are governed by the 
laws of the state where the land is situated, but as to per- 
sonal property by the law of the state where the trust is 
created. A trust may be part valid and part invalid. A 
trust cannot be created for an illegal purpose. 

An express trust, in the absence of a provision reserving a 
power of revocation, cannot be revoked without the consent 
of the beneficiary. A trust however may be ended by failure 
of the objects for which it is created. In case of a breach of 
duty on the part of the trustee the court will remove him and 
appoint a new trustee. Courts of equity have supervision over 
all trusts and trustees and under certain circumstances, as 
where its purpose has failed, may terminate a trust or in case 
of ambiguity in the instrument creating the trust will give 
directions to the trustee as" to its management, or construe 
it and declare its meaning. A trust will not fail because of 
the death of a trustee, or his refusal to act, but in that case 
the court will appoint a new trustee. If a trust is created 
but no trustee appointed the court will appoint one. 

173 



EVERYDAY LAW 






As a general rule anyone capable of holding real or personal 
property can be a trustee. Of late years laws have been enacted 
for the organization of corporations with power to execute 
trusts of all kinds, and such trust companies exist in all the 
states and their business is constantly increasing. Such a 
corporation may be a trustee. Under some circumstances a 
married woman or a minor may be a trustee. Executors and 
administrators may from the nature of things become trustees, 
especially an executor under the provisions of a will. 

A trustee is not bound to accept the trust but if he does accept 
it he must discharge the duties connected with it to the best 
of his ability. If required by the beneficiary of the trust, or 
by the creator, or directed by a court, he must give bond 
for the faithful performance of his duties. A trustee if he 
once accepts cannot discharge himself from liability by re- 
signing, but he may by decree of a court having jurisdiction 
be relieved of his trust and a new trustee will be appointed 
and up$n making a settlement of his accounts the old trustee 
will be discharged. 

The powers and duties of a trustee are usually derived from 
the instrument, such as a will or deed, creating the trust, but 
certain duties are implied by law from the very nature of the 
transaction. If a trustee accepts the trust he is bound to exe- 
cute it; he must exercise that care and diligence which an 
ordinarily prudent man would exercise in the management of 
his own affairs. A court will not hold him responsible for 
mere mistakes or errors of judgment, or losses not caused by 
any lack of fidelity or failure on his part to exercise reasonable 
care. A trustee cannot derive any individual advantage or 
profit out of his trust, or act in any antagonistic capacity, 
but is bound to exercise the utmost good faith. A trustee 
can deal with a beneficiary of the trust if he acts with the 
utmost fairness, but all such dealings are looked upon with 
suspicion. If two or more trustees are appointed, they must 
act jointly. 

A trustee has a right to incur and pay, and be reimbursed 
for all reasonable necessary expenses in the administration of 

174 



TRUSTS 

the trust, and where it is not charitable in its nature is enti- 
tled to compensation for his services. Trustees of what is 
called an "eleemosynary" or "charitable" corporation, as a 
school, asylum or hospital, are not entitled to compensation 
and if one accepts such a trust he is supposed to act from 
a sense of duty. 

It is the duty of a trustee to keep accurate accounts of his 
receipts and disbursements on account of the trust; to make a 
settlement of his accounts as required by the instrument creat- 
ing it to the beneficiary, or as required by the court. Usually 
a trustee can apply to the court for directions as to the ad- 
ministration of his trust and he may apply to the court to have 
his accounts settled. On the termination of a trust he must 
account for money in his hands undisposed of. This account- 
ing is sometimes made to the beneficiary of the trust, or it 
may be made as directed by the court. 

A trustee must keep all money and property of the trust 
separate and apart from his own. 



175 



CHAPTER XXXVII. 



WILLS. 



THE law recognizes the right of the owner of property 
to direct how it shall be disposed of after his death, 
and name a person, or persons, who shall carry out 
such directions. The writing containing such direc- 
tions is called a "will," or last "will and testament. ,, Statutes 
exist in all the states in regard to wills, and are very similar 
in their provisions. They specify the persons who may make 
a will, how it shall be executed and how established, or proved, 
and under what supervision its provisions may be carried out, 
and also make limitations upon the provisions of a will or 
powers conferred by it. An addition to a will is called a "codi- 
cil, " and is considered part of the original will, and must be 
executed in the same manner. It should refer to the original 
will. 

The word "devise" is used in regard to a gift of real prop- 
erty and "bequest" is a gift of personal estate. The gift of 
personal property is called a "legacy" and the person to whom 
it is given is a "legatee." The party to whom a gift of real 
estate is made is called a "devisee." A will is sometimes 
called a "testament" and the person making the will, if a man, 
is called a "testator," and if a woman, a "testatrix." 

Although a will is required to be in writing, yet the law 
recognizes in special cases, mentioned in the statute, what is 
called a "nuncupative", or oral, will which consist of directions 
given orally by a dying person, usually a soldier or sailor, 
for the disposition of a limited amount of personal property 
not exceeding a certain amount, generally one or two hundred 
dollars. In the case of a nuncupative will the statute usually 
requires that proof of it be made within a limited period after 
the death of the person making it, as for instance six months, 
and that the substance of the will must be reduced to writing 
within thirty days after the testamentary words are spoken. 

In some states a will entirely in the handwriting of the 
testator, called an olograph will, although not witnessed is 
valid. 

j 176 



WILLS 

Every person of sound mind who has attained majority can 
make a will of all his property, and in some states a male per- 
son over the age of eighteen can make a will of personal prop- 
erty. A woman of sound mind, whether married or unmarried, 
can generally make a will if she has reached the age of ma- 
jority, but no will, by either that of man or woman, can cut 
out the rights of the wife, or husband, such as dower or estate 
by the curtesy, which are conferred by statute. He or she 
in such case can repudiate the will and take what the law 
gives. 

Every will must be in writing signed by the testator or by some 
person by his direction and in his presence, and must be attested 
by at least two, or sometimes three, competent witnesses, sub- 
scribing their names to the will in the presence of each other 
and the testator. The testator must sign his name also in 
the presence of the witnesses and each of the witnesses in 
the presence of each other. Some states require three wit- 
nesses and some states require the witnesses to add to their 
signatures their respective places of business. In a few states 
a will wholly in the handwriting of the testator is valid without 
witnesses and even when not signed if the testator states his 
name in the beginning. 

A will can only be revoked by a subsequent will in writing, 
or by burning, cancellation, tearing, or obliterating, the same 
by the testator, or in his presence by his consent and direc- 
tion. Sometimes it happens that a testator will make altera- 
tions in a will by writing them in it, but such alterations will 
not be of any avail, because not executed in the presence of 
witnesses as the original will but the will can be proved in 
its original form. If alterations are made in a will it must 
be re-executed. 

A will executed by an unmarried woman is generally deemed 
revoked by a subsequent marriage, and if an unmarried man 
makes a will disposing of his whole estate and afterwards 
dies leaving issue by such marriage living at the time of his 
death, or born after his death, such will will be deemed re- 
voked unless provision shall have been made for such issue 

177 



EVERYDAY LAW 

by some settlement or provided for in the will. The widow 
in such case can take the same as if there was no will if she 
wishes. It is a general rule also that if after the making of 
a will other children are born, or if a will be made not pro- 
viding for or mentioning the children, the maker of the will 
is deemed to have died intestate as to the children not named 
in the will, or born subsequent to the making of the will, 
if no provision is made for them in the will. It is also a rule 
that if a child is dead when the will is made leaving descend- 
ants and no mention of them, or provision for them, is made 
in the will the testator dies intestate as to such descendants. 

Under the law a legatee, or devisee, in a will cannot be a 
subscribing witness, but if he does sign the will as a witness 
the will is not thereby made void, but the devise or legacy to 
such attesting witness is void. If such witness would be enti- 
tled as heir to any share of the testator's estate, the share 
that would have gone to him by law will in some states be 
saved to him if it does not exceed the value of the devise or 
bequest made in the will. If the will is attested by a sufficient 
number of competent witnesses, excluding the witness who 
was a legatee or devisee, then such devise, or legacy, will 
be valid. 

A will can only be made by a person of sound mind. Al- 
though the testator's mind may have become weakened by 
sickness or old age, still he has sufficient legal capacity to make 
a will if he has sufficient mind to know what property he has, 
who the persons are who have a moral claim for his considera- 
tion, and can understand how he is disposing of such property. 
Even a person of unsound mind can make a will in a lucid 
interval. The law regards anyone of sound mind if he has 
sufficient mind and memory to intelligently understand that 
he is making a will, and understands and is able to direct how 
he wants his property disposed of in case of his death. Even 
a dumb or blind person may make a will. Mere eccentricity, 
or delusions, will not impair the validity of a will, provided 
the delusion does not affect a particular disposal of the prop- 
erty, as for example, if a man should recite in his will that 

178 



WILLS 

he does not leave his son John any of his property because 
John has been guilty of certain conduct, when in fact the testa- 
tor is under a delusion as to such conduct and the son in 
reality has not been guilty of the acts charged against him, 
the will will be invalid as to such son. 

The law provides how wills may be proved or established 
in the court of proper jurisdiction, as for instance, a probate, 
or surrogate's court, and also provides for the granting of 
letters testamentary on the will, the duties of the executor, 
and how a will which has been established may be set aside 
or contested. 

Any words in a will manifesting an intent to dispose of 
property in a certain way will be held sufficient. In construing 
a will the court always looks for the intent of the testator and 
it is best in drafting a will to endeavor to state the wishes 
of the testator by using his very words. The wills of many 
learned lawyers have been set aside because of uncertainty 
in their expressions, or invalidity in other respects. Many 
very simple wills, drawn by those who were not lawyers, have 
been sustained and held to be sufficient, while others of great 
length, prepared by capable lawyers, have proved defective. 

A will should appoint a person to execute it, who, if a man, 
is called "executor," or if a woman, "executrix," and the will 
may provide that no bond shall be required from him; but 
if the will does not so provide letters testamentary will not 
be issued on the will without the furnishing of a bond by the 
executor. Moreover creditors may require an executor to give 
a bond even though it is not required by the will. 

An executor may decline to serve, in which case the court 
will appoint a suitable person to execute it who is called "ad- 
ministrator c. t. a." which means "administrator with the will 
annexed." 

Form of Will. 

The following is a simple form of a will which may be used 
inserting after the first clause and before the appointment of 

179 



EVERYDAY LAW 

an executor, a clear statement in plain words of just what the 
testator wants to do with his property: 

"I, John Smith, of the City of Chicago and State of Illi- 
nois, hereby declare this to be my last will. 

I give to my wife, Emma Smith, all the property I may have 
at the time of my death, having confidence that she will ade- 
quately provide for any child or children we now have or that 
may hereafter be born to us. 

I appoint my said wife Emma Smith executrix of this will 
without bond. 

In Witness whereof, I have hereunto set my hand on this 
10th day of June, 1912. 

John Smith." 

The attesting clause may be as follows, although in most 
states it is sufficient if the will is signed by .two persons who 
add after their names the word "witnesses." 

"In the presence of us and each of us, the above named 
testator, John Smith, signed the foregoing instrument and 
declared the same to be his last will, and in his presence and 
at his request and in the presence of each other we here sign 
our names as witnesses." 

(For further information see the subject, Administration.) 



180 



INDEX 



[REFERENCE IS TO PAGES.] 



ABATEMENT. 

of nuisance when, 147. 
ACCIDENT INSURANCE. 

see Insurance. 
ACCOMMODATION PAPER 

what is, 137. 
ACCOUNTS. 

administrator or executor 
must present, 6. 

guardian must keep, 100. 
ACKNOWLEDGMENT. 

of mortgage, 130. 

of deed, 161. 

of power of attorney, 14. 
ACT OF GOD. 

what is, 36. 
ADMINISTRATION. 

definition of, 3. 

when necessary, 4. 

where to be had, 4. 
ADMINISTRATOR. 

definition of, 3. 

who may be, 5. 

duties of, 6. 

when checks signed by more 
than one, 28. 

entitled to compensation, 8. 
must give notice of appoint- 
ment, 6. 

discharge of, 7. 
ADMINISTRATOR WITH 
WILL ANNEXED. 

meaning of term, 5. 
ADMINISTRATRIX. 

definition of, 3. 
ADOPTED CHILD. 

rights of, 75. 
ADVANCEMENT. 

what is, 75. 
AGENCY. 

kinds of, 9. 



AGENT. 

definition of, 9. 

acts within apparent scope of 

authority of, 11. 
classes of, 9. 
authority of, 11. 
infant may be, 98. 
cannot act for adverse party 

and principal, 12. 
cannot make secret profit, 12. 
how should sign notes, etc., 13. 
manner of appointing, 10. 
must act in good faith, 12. 
revocation of authority of, 11. 
termination of authority of, 

10. 
unauthorized act can be rati- 
fied, 10. 
when personally liable, 13. 
who can appoint, 9. 
APPLICATION. 

for life insurance policy, 110. 
APPRAISERS. 

provision for in fire insurance 

policy, 110. 
ARBITRATION. 

definition of, 15. 
ARBITRATORS, 
definition of, 15. 
duties of, 15. 
ASSOCIATIONS, 
definition of, 16. 
courts will not interfere with 

when, 16. 
majority can bind minority 

in, 17. 
members governed by articles 

of agreement, 16. 
members are partners when, 

16. 
meetings of, 16. 
rights of members of, 16. 
what is quorum, 16. 



182 INDEX 



ATTORNEY. 

form of power of, 13. 
ATTORNEYS. 

are officers of court, 67. 
AWARD. 

finding of arbitrators is, 15. 

BAGGAGE. 

definition of, 41. 

liability of carrier for, 41. 
BAILMENT. 

definition of, 18. 

nature of contract of, 18. 

any personal property may be 
subject of, 20. 

different kinds of, 18. 
BAILEE. 

definition of, 18. 

cannot become such unless he 
consents, 19. 

carrier is, 20. 

degree of care required of, 19. 

finder of lost property is, 19. 

when not responsible, 19. 

BAILOR. 

definition of, 18. 

need not be absolute owner of 
property, 19. 
BANKS AND BANKING. 

see Bank. 
BANK. 

different kinds of banks, 24. 

definition of, 24. 

certificate of deposit in, 25. 

duty in collecting drafts, 26. 

relation of depositor to, 25-27. 

duty of depositor when book 
is balanced, 29. 

lien of, 24. 

stopping payment of check, 29. 

certified check on, 29. 

when must pay check, 29. 

must know signature of de- 
positor, 29. 

when can apply depositor's 
balance to debt, 30. 

relation to clearing house, 30. 
BANKRUPT. 

definition of, 21. 

who may be, 21. 
BANKRUPTCY. 

courts of, 21. 

receiver in, 23. 

referee in, 23. 

law for, 21. 

trustee in, 23. 

procedure in, 22. 

voluntary and involuntary, 22. 

what debts are discharged by, 
22 
BASTARD. 

rights of, 75. 



BENEFIT CERTIFICATE. 

nature of, 113. 
BILL OF EXCHANGE. 

checks on bank are, 27. 

see also Negotiable Instru- 
ments. 
BILL OF LADING. 

is receipt of carrier, 37. 

when fictitious represents 
nothing, 38. 

is negotiable, 38. 
BOND. 

of administrator or executor, 
5. 

penal sum in, 33. 

is promise to pay money, 34. 
BONDS. 

definition of, 32. 

of public officer, 32. 

corporation can issue, 63. 

definition of, 32. 

different kinds of, 32. 

debenture, 34. 

essentials of, 34. 

of corporation, 32. 
BORROWER. 

is bailee, 19. 
BY-LAW. 

of corporation, 56. 

CARRIERS. 

definition of, 35. 

railroad is, 36. 

duty of to passenger, 38. 

general duties of, 35. 

elevators are, 41. 

kinds of, 35. 

liability of, 36. 

liability of for negligence, 37. 

liability for baggage of pas- 
senger, 41. 

lien of, 38. 

street car companies are, 41. 
CAR TRUST CERTIFICATE. 

nature of, 64. 
CERTIFICATE OF STOCK. 

nature of, 58. 
CESTUI QUE TRUST. 

definition of, 171. 
CHARTER. 

of corporation, 54. 
CHATTEL MORTGAGE. 

see Mortgage, 129. 

CHECKS. 

what is certifying, 29. 
status when forged, 29. 
presentation of, 28. 
stopping payment of, 29. 
see also Banks and Negotiable 
Instruments. 



INDEX 



183 



CHILDREN. 

entitled to homestead, 85. 
see also Infants. 
CIVIL LAW. 

definition of, 2. 
CLEARING HOUSE. 

what it is, 30. 
CODICIL. 

is addition to will, 176. 
COMMON CARRIERS. 

see Carriers. 
COMMON LAW. 

definition of, 2. 
COMMON LAW MARRIAGE. 

what is, 90. 
COMMUNITY PROPERTY. 

meaning of, 96. 
COMMERCIAL PAPER. 

see Negotiable Instruments. 
CONTRACT. 

definition of, 42. 

when binding, 42. 

parties to, 42. 

kinds of, 43. 

consideration for, 43. 

when complete, 44. 

must be certain in terms, 44. 

fraud or duress vitiates, 45. 

what is fraud, 46. 

what is duress, 46. 

what is undue influence, 47. 

illegal agreement not en- 
forced, 47. 

against public policy void, 48. 

cannot oust jurisdiction of 
court by, 48. 

in restraint of trade is void, 
48. 

when illegal not enforced, 49. 

construction of, 49. 

discharge of, 49. 

may be joint or several, 50. 

validity of, how determined, 
50. 

damages for violation of, 50. 

when must be in writing, 50. 

rules for writing, 51. 

form of, 51. 

of bailment, 18. 

partnership is, 148. 

of sale, 163. 

CONSTITUTION. 
nature of, 1. 
of voluntary association, 16. 

CONSTRUCTION. 

of contract rules for, 49. 
CONSIDERATION. 

for contract, 43. 
CONVEYANCE. 

of land, 161. 



COPYRIGHT. 

definition of, 157. 

subjects of, 157. 

who can obtain, 158. 

how obtained, 158. 
CO-PARTNERSHIP. 

see Partnership. 
CORPORATIONS. 

are artificial beings, 53. 

divided into public and pri- 
vate, 53. 

may be of public nature, 53. 

kinds of, 54. 

how differ from partnership, 
54. 

charter of, 54. 

power to contract, 43. 

organization of, 55. 

stockholders in, 55. 

meetings of, 56. 

by-laws of, 56. 

capital stock of, 56. 

assets of is trust fund, 57. 

payment for stock in, 57. 

transfer of stock in, 58. 

kinds of stock in, 58. 

dividends of, 59. 

preferred stock in, 59. 

directors in, 60. 

powers of, 62. 

can issue bonds, 63. 

may be guilty of wrongdoing, 
64. 

dissolution of, 64. 

COURTS. 

opinions of published as re- 
ports, 2. 

jurisdiction of not ousted by 
contract, 48. 

kinds of, 66. 

powers of, 66. 

officers of, 66. 

COUSINS. 

when cannot marry, 89. 

CRIMES. 

infant liable for, 98. 

insanity as excuse for, 105. 
CUMULATIVE VOTING. 

meaning of, 56. 

CURATOR. 

for infant, 99. 

for insane person, 104. 

DAMAGES. 

definition of, 68. 

classes of, 68. 

law Jiolds person responsible 

for negligence, 68. 
injury to another compensated 

by damages, 68. 
when awarded for breach of 
contract, 69. 



184 



INDEX 



DAMAGES — Cont'd 

elements of for injuries to per- 
son, 69. 

speculative profits not al- 
lowed, 69. 

husband can recover for in- 
jury to wife, 70. 

allowed for wrongful deten- 
tion of property, 70. 

allowed for malpractice, 70. 

interest is, 71. 

none for wrongful act causing 
death, when, 71. 

corporation may be liable 
for, 64. 

DEATH. 

recovery of damages for in- 
juries causing, 71. 
DEBTS. 

estate of deceased liable for, 6. 
DEED. 

definition, 161. 

DELIVERY. 

completes sale, 165. 

DESCENT AND DISTRIBU- 
TION, 
definition of, 72. 
what is descent, 72. 
classification of subject, 72. 
when rights of heirs become 

vested, 73. 
what law governs, 73. 
meaning of next of kin, 73. 
general rules of descent, 74. 
what is advancement, 75. 
What is hotchpot, 75. 
rights of bastard, 75. 
rights of adopted child, 75. 

DEVISEE, 
see Wills. 

DEVISE. 

see Wills. 

DIRECTORS. 

duty of in corporation, 60. 

DISCOUNT. 

meaning of, 24. 

DISSOLUTION, 
of corporation, 
of partnership, 157. 

DIVIDEND. 

represents profit of corpora- 
tion, 59. 

DIVORCE, 
kinds of, 92. 
grounds for, 91. 
where suit for brought, 92. 
jurisdiction in, 92. 
effect of, 92. 



DOWER. 

meaning of, 76. 

husband cannot deprive wife 
of, 76. 

common law right of, 76. 

things necessary for right, 77. 

when cannot be claimed, 77. 

effect of divorce, 78.' 

methods for recovery of, 78. 

particular assignment of, 78. 

death ends right, 79. 
DRAFTS. 

see Negotiable Instruments 
and Banks and Banking. 
DRUNKEN PERSON. 

as party to contract, 42. 
DURESS. 

what is, 46. 
DWELLING. 

can be homestead, 80. 

EASEMENT. 

definition, 160. 
ELEVATORS. 

in public buildings are com- 
mon carriers, 41. 
EQUITY' OP REDEMPTION. 

definition, 133. 
EVICTION. 

what it is, 123. 
EXECUTOR. 

definition of, 3. 

who may be, 5. 

duties of, 6. 

EXECUTRIX, 
definition of, 3. 

EXEMPLARY DAMAGES. 

nature of, 70. 

EXEMPTIONS. 

definition of, 80. 

homestead part of, 80. 

right rests on statute only, 80. 

not allowed out of partner- 
ship funds, 80. 

of wages, 81. 

allowed only to head of fam- 
ily, 81. 

salary, public officers exempt, 
81. 

cannot be waived by agree- 
ment in advance, 82. 

FAMILY. 

who constitute, 81. 
who is head of, 86. 
when entitled to homestead, 

85. 

FIRE INSURANCE, 
see Insurance. 



INDEX 



185 



FIXTURES. 

what are, 161. • 

FORCIBLE ENTRY AND DE- 
TAINER, 
definition of, 125. 

FORECLOSURE. 

of mortgage, 132. 
FORMS. 

of promissory note, draft and 
check, 143. 

of power of attorney, 13. 

of contract, 51. 

of will, 179. 
FRATERNAL BENEFICIARY 
ASSOCIATIONS. 

business and contracts of, 113. 
FRAUD. 

never defined by courts, 164. 

when sale vitiated by, 164. 

in contract, 45. 

GARNISHMENT AND EXE- 
CUTION. 
definition of, 83. 
creditor must first obtain 

judgment, 83. 
writ not allowed against trus- 
tee, 83. 
procedure regulated by stat- 
ute, 84. 
GIFTS. 

husband and wife can ex- 
change, 95. 
GOOD WILL. 

of partnership, 151. 
in trade-mark, 155. 
GUARDIAN, 
for infants, 99. 
duties of, 100. 
of insane person, 105. 
GUEST. 

rights of in inn, 102. 

HEAD OF FAMILY. 

who is, 85. 
HEIRS. 

see Descent and Distribution. 
HEREDITAMENT. 

definition of, 160. 
HOMESTEAD. 

definition of, 85. 

allowed for protection of fam- 
ily, 85. 

allowed only to residents of 
state, 86. 

only head of family can have, 
86. 

method of setting off, 86. 

not allowed partners, 86. 

not exempt from taxes, 87. 



HOMESTEAD — Cont'd 

allowed after death of hus- 
band, 87. 

how allowed, 87. 

may be obtained when, 87. 

allowed to husband though 
title is in wife, 87. 
HOTEL. 

see Inn. 
HOTCHPOT. 

definition of, 75. 
HUSBAND AND WIFE. 

definition of relation, 89. 

who may contract marriage, 
89. 

marriage is civil contract, 89. 

no ceremony necessary for, 89. 

blood relatives cannot marry, 
89. 

what is common law mar- 
riage, 90. 

license for, 90. 

when contract avoided, 90. 

laws regulating, 90. 

annulment of, 91. 

when relation dissolved, 91. 

grounds for divorce, 92. 

rights of parties, 92. 

as parties to contract, 42. 

husband head of familv, 93. 

limits on right of husband, 93. 

reciprocal rights and duties 
of, 93. 

conveyance of and by, 94. 

power of wife to bind hus- 
band, 94. 

marriage settlement, 94. 

may exchange gifts, 95. 

wife may have separate es- 
state, 95. 

community property of, 96. 

INDORSEMENT. 

see Negotiable Instruments. 
INDORSER. 

release of, 169. 

see also Negotiable Instru- 
ments. 
INFANTS. 

definition of, 97. 

limitations on right of con- 
tract, 97. 

one may be agent, 98. 

liability for crime, 98. 

right to sue, 99. 

who natural guardian of, 99. 

appointment of guardian or 
curator, 99. 

duties of guardian or curator, 
100. 

when administration on estate 
of is necessary, 4. 

as parties to contracts, 42. 



186 



INDEX 



INFRINGEMENT, 
of patent, 154. 
of trade-mark, 156. 
ILLEGALITY. 

avoids contract, 47. 
INNKEEPERS, 
who are, 101. 

regulation of inns by law, 101. 
duties of, 101. 
must protect guests, 102. 
liability of for property of 

guest, 102. 
compensation of, 102. 
rights of visitors, 103. 
INSANE PERSONS, 
definition of, 104. 
protection of property of, 104. 
duties of guardian of, 104. 
husband liable for support of 

insane wife, 104. 
rights of, 105. 
not criminally liable, 105. 
method of bringing suits by, 

105. 
as parties to contract, 42. 
INSURANCE. 

is a contract, 106. 

parties to contract of, 106. 

how business carried on by, 

106. 
insurance department, 106. 
is based on law of averages, 

106. 
mortality tables, 106. 
insurable interest, 107. 
kinds of insurance, 107. 
contract one of indemnity, 

107. 
subject of is called risk, 107. 
contract requires exercise of 

good faith, 108. 
discrimination by companies, 

108. 
construction of policy, 108. 
conditions in fire policy, 109. 
conditions of as to use of 

premises, 111. 
notice and proofs in case of 

loss, 109. 
arbitration of loss, 109. 
life policies, 110. 
statements in policies, war- 
ranties or representations, 

110. 
different kinds of policies, 110. 
method of doing business, 111. 
incontestable clause in life 

policies, 111. 
insurable interest in life, 112. 
premium must be paid 

promptly, 112. 
insanity or sickness no excuse 

for non-payment of pre- 
miums, 112. 



INSURANCE — Cont'd 

reserve on life policies, 112. 

paid up insurance, 112. 

extended insurance, 112. 

concealment of material fact 
avoids, 113. 

business how carried on, 113. 

fraternal beneficiary associa- 
tions, 113. 

nature of business of frater- 
nals, 113. 

benefit certificates, 113. 

assessments, 114. 

accident policy, 114. 

conditions in, 114. 

accident must be proximate 
cause of disability or death, 
115. 

condition as to change of oc- 
cupation, 115. 

no liability for death from 
poison, 116. 

payment in case of disability, 
116. 

notice and proofs, 116. 

miscellaneous forms of poli- 
cies, 117. 
INSURABLE INTEREST. 

definition, 107. 

what is in life insurance, 112. 
INSOLVENCY. 

definition of, 21. 
INTEREST. 

definition of, 118. 

kinds of interest, 118. 

when interest begins, 118. 

how usury determined, 119. 

sometimes allowed as dam- 
ages, 71. 
INTESTATE. 

meaning of, 3. 
INVENTORY. 

administrator or executor 
must make, 6. 

JOINT STOCK COMPANY, 
nature of, 61. 

LAND. 

see Real Estate. 
LANDLORD AND TENANT, 
what constitutes the relation, 

120. 
how relation created, 120. 
consideration of lease called 

rent, 120. 
kinds of tenancy, 120. 
lease may be verbal, 120. 
no form of lease essential for 

validity, 121. 
how lease is made, 121. 
tenant cannot deny landlord's 

title, 121. 



INDEX 



187 



LANDLORD AND TENANT— 
Cont'd 

may be made for any length 
of time, 122. 

implied covenants in lease, 
123. 

rights of tenant, 123. 

liability of tenant, 123. 

obligation for rent, 124. 

termination of tenancy, 124. 

summary action to recover 
possession, 125. 
LAW. 

definition of, 1. 

kinds of, 1. 
LAW MERCHANT. 

what is, 136. 
LEASE. 

see Landlord and Tenant. 
LEGACY. 

see Will. 
LEGATEE. 

see Will. 
LEGISLATURE. 

function of, 2. 
LETTERS PATENT. 

see Patents. 
LIENS. 

definition of, 126. 

different kinds of, 126. 

how created, 126. 

vendor's lien, 127. 

of pledgee, 127. 

created by judgment, 127. 

by attachment, 128. 

hotelkeeper has, 128. 

boarding house keeper has, 
128. 

of mortgage, 131. 

of common carrier, 38. 
LIFE INSURANCE. 

see Insurance. 
LIQUIDATED DAMAGES. 

what are, 71. 
LOSS OP TIME. 

as elements of damage, 69. 
LOST PROPERTY. 

finder of is bailee, 19. 

MALPRACTICE. 

damages for, 70. 
MARRIAGE. 

what constitutes, 89. 

parties to, 89. 

when invalid, 90. 

is civil contract, 89. 
MARRIAGE SETTLEMENT. 

definition of, 95. 
MECHANIC'S LIEN. 

see Lien. 



MEETINGS. 

of voluntary association, 16. 

of stockholders in corporation, 
55. 

of stockholders, where held, 
61. 
MISTAKE. 

as ground to avoid contract, 
45. 
MINOR. 

see Infant. 
MORTALITY TABLES. 

definition of, 106. 
MORTGAGE. 

definition of, 129. 

parties to, 129. 

of chattels, 129. 

what necessary to create, 129. 

right to foreclose must exist, 
129. 

validity of, how determined, 
129. 

execution of, 130. 

parties to, 130. 

must be consideration for, 130. 

no particular form necessary, 
when, 131. 

effect of, 131. 

must be delivered, 131. 

construction of, 131. 

satisfaction of, 132. 

foreclosure of, 132. 

redemption of mortgages, 133. 
MORTGAGEE. 

see Mortgage. 
MORTGAGOR. 

see Mortgage. 
MUNICIPAL BOND. 

definition, 33. 

NATURAL GUARDIAN. 

parent may be, 99. 
NECESSARIES. 

what are, 98. 
NEXT OF KIN. 

who are, 73. 

NEGOTIABLE INSTRU- 
MENTS. 

definiton of, 134. 

essentials of, 134. 

when payable, 135. 

when not invalid, 135. 

filling blanks in, 136. 

when instruments not negotia- 
ble, 136. 

how law of arose, 136. 

must be delivered, 136. 

rate of interest in, 137. 

presumption of consideration, 
137. 

accommodation paper, 137. 



188 



INDEX 



NEGOTIABLE INSTRUMENTS 
— Cont'd 

indorsement of, 137. • 

who holder of in due course, 
138. 

non-negotiable paper, 138. 

presentment for payment 
when necessary, 139. 

place of presentment, 139. 

dishonor of, 139. 

days of grace, 140. 

protest of, 140. 

alteration of, 140. 

drafts and bills of exchange, 
141. 

presentment of draft, 141. 

protest by whom, 142. 

what is negotiable promissory 
note, 142. 

when paper falls due on holi- 
day or Sunday, 143. 

due bill or I. O. U., 143. 

form of promissory note, 143. 

form of check, 143. 

form of bill of exchange, 144. 

NUISANCE. 

definition of, 145. 
classification of, 145. 
liabilities of person creating, 

146. 
damages for, 146. 
how abated, 147. 

NUNCUPATIVE WILL, 
see Will. 

OPTION. 

definition, 163. 
ORDINANCE. 

enactment by municipality, 2. 

PARTIES. 

to contracts, 42. 
PARTNER, 
surviving partner can adminis- 
ter, 6. 
PARTNERS. 

stockholders in corporation 

are not, 54. 
cannot have homestead in 
partnership property, 80. 
PARTNERSHIP, 
definition of, 148. 
how created, 148. 
cannot be formed for illegal 

business, 148. 
what constitutes, 149. 
special, 149. 
any name may be adopted, 

149. 
what is firm property, 150. 
obligations of partners, 150. 



PARTNERSHIP— Cont'd 

members personally liable for 
debts, 150. 

authority of partners, 150. 

liability for wrongful acts of 
partner, 151.' 

good will in, 151. 

dissolution of, 152. 
PASSENGER. 

liability of carrier to, 39. 

duties of carrier to, 38. 

liability of carrier for bag- 
gage, 41. 
PAWNBROKER. 

is bailee, 20. 

lien of, 127. 
PERPETUITY. 

rule against, 172. 
PERSONAL REPRESENTA- 
TIVES. 

who are, 3. 
PLEDGE. 

of personal property, 127. 

POLICY OP INSURANCE. 

see Insurance. 
POWER OP ATTORNEY. 

definition of, 10. 

form of, 13. 
PREFERRED STOCK. 

in corporation, 58. 
PREMIUM. 

see Insurance. 
PRINCIPAL. 

person appointing agent is, 9. 

in bond, 33. 

in contract of suretyship, 168. 
PROOFS OP LOSS. 

condition for in policies of in- 
surance, 110-11. 
PROPERTY. 

classes of, 159. 
PROTEST. 

of commercial paper, when 
necessary, 140. 

PROMISSORY NOTES. 

see Negotiable Instruments. 
PUBLIC ADMINISTRATOR. 

definition of, 4. 
PUBLIC POLICY. 

when will avoid contract, 48. 

contracts against are void, 43. 
PUNITIVE DAMAGES. 

when allowed, 70. 

QUORUM. . 

at meeting of stockholders, 55. 
at meeting of directors, 61. 
at meetings of associations, 16. 



INDEX 



189 



REAL ESTATE. 

definition of, 159. 

remainder or reversion in, 159. 

meaning of land, 160. 

meaning" of tenement, 160. 

meaning of hereditament, 160. 

absolute ownership called fee, 
160. 

what title is, 160. 

how lands transferred, 161. 

what are fixtures, 161. 
REDEMPTION. 

after foreclosure sale, 133. 
REMAINDER. 

definition of, 159. 
REPORTS. 

are published opinions of 
courts, 2. 
REPRESENTATIONS. 

what are in insurance con- 
tract, 110. 
RESERVE. 

in life insurance, 112. 

RESTRAINT OF TRADE. 

contract in void, 48. 
REVERSION. 

definition of, 160. 
RISK. 

is the subject of insurance, 
107. 

SALARY. 

when exempt, 81. 
SALES. 

definition of, 163. 

parties to, 163. 

what contracts must be in 

writing, 164. 
effect of fraud or misrepresen- 
tation, 164. 
implied warranty in, 164. 
what constitutes fraud, 164. 
completion of sale, 165. 
payment in, 165. 
conditional. 166. 
stoppage in transitu, 166. 
on consignment, 166. 

SAVINGS BANKS, 
what are, 27. 

SPECIAL PARTNERS. 

who are, 149. 
SPECULATIVE PROFITS. 

not elements of damage, 70. 

SPENDTHRIFT TRUST. 

nature of, 172. 
STATUTE OF FRAUDS. 

effect on sales, 164. 

effect on contracts, 50. 

applied to sureties, 168. 



STATUTE OF LIMITATIONS. 

what it is, 21. 
STATUTES. 

by whom made, 2. 
STOPPAGE IN TRANSITU. 

what it is, 38. 

in case of sale, 166. 
STOCK. 

in a corporation, 55. 

kinds of in corporation, 58. 

register of, 59. 

see also Corporation. 
STOCKHOLDERS. 

rights of, 61. 
STREET CAR COMPANIES. 

are common carriers, 41. 
SUICIDE. 

condition against in life in- 
surance policy, 111. 
SURETIES. 

definition of, 168. 

how relation created, 168. 

contract of must be in writ- 
ing, 168. 

when surety is not bound, 168. 

relation must be created by 
writin.g, 169. 

construction of agreement, 
169. 

when relation terminates, 169. 

business of surety company, 
169. 

TENANT. 

see Landlord and Tenant. 
TENEMENTS. 

definition of, 120. 
TESTAMENT. 

name applied to will, 176. 
TESTATOR. 

definition of, 3. 
TESTATRIX. 

definition of, 3. 
TICKET. 

of passenger, effect of, 39. 
TITLE. 

to real estate, 160. 
TRADE-MARK. 

definition of, 155. 

how acquired, 155. 

on what acquired, 155. 

when valid, 156. 

effect of misrepresentation in, 
156. 

descriptive words cannot be, 
156. 

infringement of, 156. 

unfair competition, 157. 
TRANSFER AGENT. 

for stock of corporation, 59. 



190 



INDEX 



TRAVELER. 

rights of in inn, 101. 
TRUSTEE. 

definition of, 171. 
TRUSTEES. 

directors of corporation are, 

61. 
TRUST FUND. 

Assets of corporation are, 57. 
TRUSTS. 

definition of, 171. 

parties to, 171. 

different kinds of, 171. 

must be created by instrument 

in writing", 172. 
One may constitute himself 

trustee, 173. 
cannot be for illegal purpose, 

173. 
when cannot be revoked, 173. 
who may be trustee, 174. 
trustee not bound to accept 

trust, 174. 
powers and duties of trustee, 

174. 
compensation of, 174. 

ULTRA VIRES. ■ 

meaning of term, 55. 
UNDUE INFLUENCE. 

definition of, 46. 

UNFAIR COMPETITION. 

definition of, 157. 
USURY. 

what is, 119. 

how determined, 119. 

VOLUNTARY ASSOCIATION. 

definition of, 16. 
VOTE. 

of stockholder in corporation, 
56. 



WAIVER. 

none of exemptions, when, 81. 
of conditions of insurance con- 
tract, 110. 

WARRANTY. 

in case of sale, 164. 
what is in insurance contract. 
110. 

WIDOW. 

right to dower, 77. 

WIFE. 

entitled to homestead, 86. 
separate estate of, 95. 
when can bind husband, 94. 
rights of in property, 92. 

WILL. 

definition of, 176. 
addition to called codicil, 176. 
what is devise or bequest, 176. 
legatee and devisee, 176. 
testator and testatrix, 176. 
must be in writing, 176. 
exception of nuncupative will, 

176. 
olograph will, 176. 
who may make, 177. 
witnesses to, 177. 
revocation of, 177. 
of unmarried woman, when 

revoked, 177. 
legatee or devisee cannot be 

witness, 178. 
can only be made by person 

of sound mind, 178. 
how proved, 179. 
executor or executrix of, 179. 
administrator c. t. a., 179. 
form of, 179. 
form of attestation, 180. 

WITNESS, 
to will, 178. 






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